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Need Some DRAM? Fire Sale Almost Over

DRAM prices for the most recent quarter have continued their downward spiral with spot prices of 2GB DDR3 modules recently hitting US$1.20, below the US$1.50 cost mark. This has prompted Taiwanese vendors Nanya, UMC and others to plan on cutting back DRAM production in August to stem the bloodflow while they work toward migration to 30nm process by the end of this year.

The DRAM market is insanely competitive and is extremely sensitive to changes in supply and demand. These changes tend to be cyclical as the market moves from oversupply to shortage and back again. The last time we saw low prices in the DRAM markets was back in the 2008-2009 period just as the global economic meltdown put a huge dent in demand.

Recently however, the continued rise in popularity of smartphones and tablets is to some degree responsible for the current slump in DRAM demand. The latest IDC quarterly reports state that global PC sales grew only 2% to 84.4 million units over the same period last year. Meanwhile Apple’s iPad grew market share from a standing start to 11% of the PC market in about 16 months.

Smartphones and tablets are increasingly replacing notebooks and desktops as devices of choice for web browsing, light email and keeping up with your social networks. Smartphones typically have 256MB to 512MB of DRAM while tablets typically have 1GB. This is a far cry from the 4GB to 8GB that modern notebooks and desktops come equipped with.

The second part of the problem is that Taiwanese DRAM makers have lagged behind Samsung in process technology. Samsung has already migrated to 30nm production while most Taiwanese vendors are still producing on larger geometries. The lower yield per wafer adds to the cost per DRAM die. This double whammy of higher cost and lower demand is causing market prices to drop below costs due to an oversupply condition.

Short term production cuts will be used to control supply and help to push prices back up. Longer term, however, the market as a whole is expected to see increasing availability of capacity moving from 2012 to 2013 as process geometries shrink toward 20nm.

If you’ve been thinking about adding some more DDR3 DRAM to your notebook or desktop – then you might want to do it soon… like RIGHT NOW. Otherwise, your next opportunity to see these low prices may not come for another 2 years.


Source: The TechEye

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