Oversupply sends DRAM prices to one-year low

From InfoWorld: DRAM chip prices reached a one-year low on Tuesday and approached their cheapest ever due to a post-holiday oversupply. The cheap memory chips are pushing PC prices lower too, a Taiwan-based trading platform said.

Prices for commodity 1Gb DDR3 DRAM chips dropped to an average of $0.84 per unit from historic highs around $2.80 in April and May last year, said Ivan Lin, publicist and editor with DRAMeXchange. Prices hit a record low of $0.81 per chip in March 2009, according to the exchange's daily surveys.

DRAM began losing value most recently in December as the Western holiday shopping season wound down, Lin said. But major manufacturers such as Elpida Memory, Powerchip Semiconductor and Samsung Electronics kept pumping out chips to stay competitive, he said.

Increased factory capacity has also held prices in check despite warnings of a DRAM shortage due to problems obtaining equipment and phasing in new technology.

PC makers typically spend about 10 percent, or $20 to $36, of a PC's total manufacturing cost on DRAM, Lin said. Lower DRAM prices allow PC manufacturers to cut prices or to offer improved performance for the same price by adding more memory.

From December, PC makers chose to discount some of their stock, said Helen Chiang, research manager with IDC in Taipei. "They had some space to do promotions," she said.

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