The price of memory skyrockets

The price of memory skyrockets

Memory prices have tripled since November as the volatility of the memory market once again rears its head.

Several large price jumps at the end of last year spelt the end of rock-bottom SDRAM prices, and newer memory technologies such as DDR memory have also experienced price hikes. However, the increases have not been across the board - proprietary Rambus DRAM has steadily dropped, bringing it within reach of its high-speed rival, DDR.

But a host of variables has made it very difficult to tell whether the price hike will continue. On the one hand, memory manufacturers are increasing their prices of DRAM chips to help restore the profitability of their operations.

"The manufacturers have taken back control of the market," said the general manager of Asia business at Viking Components, David Whitney. "But they are facing a lot of backlash. As the market is going up, people are holding stock, but it is still a weak overall market - there is not a lot of improvement in demand. That's why it's unpredictable."

To add to the drama, the outcome of talks between Micron and Hynix over a possible merger remains uncertain and Chinese New Year is dominating the Asian market. With prices rising and falling on a daily basis, the channel is best advised to sit tight and wait it out.

"We haven't had all these factors going on at the same time in quite a while," Whitney said. "Throw into all this Intel and its CPU price decrease and anything could happen.

"The best thing to do is really only buy what you need. This is a wait-and-see time. Things should become much clearer in the next 30 days."

Resellers are also facing pressure from consumers, who have grown comfortable with cheap memory over the past 12 months.

"In the last 12 months the manufacturers have been losing money," said Kingmax national sales and marketing manager Ken Barsley. "The prices were just not sustainable. But the increase is not so good for the public, who don't understand the market. End users have been going into the dealer saying they are waiting for the price to come back down, but they don't realise that it will never drop to what it was."

Memory vendors have been doing their best to inform end users of the impact of the new prices.

"A fundamental shift in the DRAM manufacturer's thinking has taken place," Kingston Technology explained in a newsletter to customers, adding that consolidation and a reduction in inventories will bring prices back to a sustainable price point.

"We expect to see light-to-moderate allocation on select new DRAM technologies as manufacturers quote higher component prices for emerging technologies."

Prices between distributors are also expected to even out, as old inventories run down. Distributors are unlikely to stock up on memory in such a volatile market.

"There has been a lot of old stock in the market, but that is starting to run out, so dealers will find they are getting a more stable price from each distributor," said Kingmax's Barsley. "If you have had old stock, you have made money, but distributors won't be buying up stock now because prices may or may not rise. It's like the stock market - it's a risk."

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