September 18, 2007

DRAM Prices Dip Again

Against industry expectations, the market for DRAM memory is approaching the same lows experienced back in the spring, when most thought market prices had hit bottom. Generally, August is a strong month for memory demand due to production ramp-up for back-to-school and pre-holiday builds, but the market has taken a step back and spot pricing has declined. Current spot market pricing for DRAM has dropped to $17 and $31–$32 for 512MB/667 and 1GB/667, respectively. Contract prices are expected to remain low for the first half of September, and judging by the amount of product available, Converge believes there will be an additional drop in the latter half of September.

Currently, there exists much uncertainty and confusion as to where the DRAM market is headed. Many in the industry were forecasting an uptick for DRAM memory for the second half of 2007, but it has not come to fruition. OEMs claim they have plenty of stock on hand; however, we believe they have more than needed. The spot market is running well below contract and there are no signs of any opportunity buys taking place. We still believe the market will not show any significant signs of an uptick for the remainder of the year, unless a drastic event occurs over the next 2–3 months.

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