November 11, 2009

Contract manufacturers tracking Micron chip shortages

Converge Memory Update.

Pricing continues to increase at a rapid pace for both DDR2 and DDR3 memory modules. Earlier in the year market expectations were for another down year for the memory market, and yet at the close of business for October, the DDR2 and DDR3 markets had experienced eight straight months of rising prices. Clearly, computer builders did not see this coming or they would have forecasted for more supply in the second half of 2009. Most builders are getting caught short, and savvy buyers are finding that the spot market has been instrumental in assisting with supply shortages. The sweet spots are still 1GB and 2GB PC800 for desktops and notebooks, and 2GB DDR3 PC1066 and PC1333 for desktops.

While it appeared that DDR3 had stabilized for a few weeks in October, activity has once again picked up as we close out the first week of November. DRAM manufacturers have their hands full as they decide which technology to produce more of so they can take advantage of these high resale prices. Converge believes November will continue to bring shortages for modules as well as for chips. While all the talk is about module shortages, the chip market is also experiencing severe shortages. Micron parts in particular have been on a lot of contract manufacturers' radar screens for shortages, with lead times running 10+ weeks.

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