DRAM prices will continue to slide

From InfoWorld: Prices of DRAM, the main memory chips used in personal computers, fell for the first time in over a year in June as companies increased production and PC vendors toughened their stance on further price increases.

The price declines are important for anyone looking for a new computer because high DRAM prices are among the reasons PC prices have been pushed higher for the first time in years. But the slide in chip prices signals a turn in the market. A shortage of the chips earlier this year caused chip makers to increase production, thereby easing the shortage. Now, analysts say, prices will slide for the rest of the year.

"Gartner expects to see mild ASP (average selling price) declines for the remainder of 2010," the market researcher said, noting that DRAM vendors will also be able to keep reducing costs so they can maintain healthy profit margins despite lower selling prices.

DRAM had become so expensive this year that the chips accounted for 15 percent of the materials cost in a midrange PC, said Gartner in its Semiconductor Monday DQ Report. The cost prompted PC vendors toughen their stance during negotiations with DRAM makers, the market researcher said, and a decline in DRAM spot prices helped PC vendors' cause as they sought lower prices.

DRAM is traded like a commodity due to the huge amount of the chips that are produced each year. Around 20 percent of the chips are sold in the spot market, while the remaining chips are sold via contracts with PC vendors.
View: Article @ Source Site