August 12, 2009

Are DRAM manufacturers squeezing market supply to raise prices?

Converge Memory Update.

The DRAM market continues to show signs of improvement. We are currently tracking increased demand from module manufacturers for 128x8 DDR2 chips, both in PC667 and PC800 speeds. Pricing has increased significantly over the last five months. For example, the average price for a 128x8 DDR2 chip has risen from $0.85 in March to roughly $1.50 in the second week of August. There are mixed opinions on why the market has become so tight for these modules. Many end users believe that DRAM manufacturers are squeezing the supply from the market in order to increase prices. Some are claiming that their demand volume has remained steady throughout the past five months and there should be no reason for the market to heat up, while other end users are experiencing improving business conditions as we head into the second half of the year. All of this could also be leading to an increase in demand.

Either way, the market is steadily improving for both DDR2 and DDR3. The key to sustaining these improvements is to stay the course and avoid drastic spikes and dips in spot market activity. Any sign of inventory "dumping" will erase some if not all price increases in the memory market this year.

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