Chip price falls again

Chip price falls again
Poor demand and oversupply hitting price of DRAM; rumours in market may have affected pricing. David Manners Memory makers cannot agree on the cause of the latest drop in DRAM prices. Some claim that ‘maybe’ chip vendors are pre-shipping April requirements to their customers at low prices in order to make their March budget figures. The market situation, according to James Hone at DRAM price trackers ICIS-LOR, is that the price on the PC100 64Mbit synchronous DRAM has now slipped to $7 in the US and $7.10 in Asia from $7:50 and $7:80 respectively at the beginning of the month. This comes on top of a severe reduction from $10 at the beginning of the year. “Demand is poor and there’s oversupply,” said Hone. But Toshiba’s managing director Mike Edwards said: “The market’s not particularly soft”, while Fujitsu reported strong demand at top tier PC makers. However there are a number of rumours in the market that may have affected pricing sentiment. One example is that Compaq has decommitted to Micron Technology – one of the top three suppliers – which could free up a lot of product in the spot market. Another explanation is that top tier PC makers have decided to go with PC133 DRAM rather than wait for Rambus and are buying up as much PC133 as they can from the more advanced DRAM manufacturers at the expense of PC100. There are also reports that the reseller channel is clogged with PCs while the PC makers still churn out machines at full tilt. “If DRAM prices don’t stabilise this year, shortages will occur next winter as people concentrate on profitable areas,” said Guy Nelmes at Fujitsu. The Japanese companies have been cutting back production, but the Koreans are reported to have upped production in Q1 in the wake of the 64Mbit reaching $10 at which price it was profitable.


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