DRam prices are on the up and supplies will remain tight throughout the fourth quarter, according to figures from analyst firm iSuppli.
Prices in both the spot and OEM contact markets rose during the first half of October, iSuppli claimed. Strong demand for 256MB DDR memory, combined with supply shortages from key DRam manufacturers, were cited as the reasons for the price hike.
As a result, iSuppli has changed its market rating to 'positive' for the first time since March but remains cautious about the next three months.
"Depending on seasonal PC demand and the rate of adoption by computer OEMs for DDR2, DDR could enter a state of very tight supply in Q4, similar to what the industry experienced in Q2, when suppliers faced severe obstacles migrating to the 0.11 geometry, constraining supplies," said Nam Hyung Kim, principle analyst at iSuppli.
"On the demand side, several positive developments are contributing to the renewed vigour of pricing. In Q4 Intel is expected to aggressively market its new Grantsdale PC core logic chipset, which supports wireless connectivity and DDR2 DRam.
"Demand for motherboards based on AMD's K8 microprocessor is strong as well. Beyond the traditional OEM market, demand for K8-based motherboards from white-box PC makers is becoming stronger in all regions."
Supply constraints for this month have also been noted by market watcher DRameXchange, which predicted supply will trail demand by over eight per cent. In addition to seasonal factors, the firm said there are constraints because DRam makers are focusing on non-DRam products, a slower-than-expected change over to 12in wafers and delays with testing.
It also found that while DDR demand had increased, demand for next-generation DDR2 DRam was flat in September. DDR2 accounted for only 9.3 per cent of Samsung's total DRam output, 10.5 per cent of Elpida's, 5.4 per cent of Micron's and less than one per cent of Nanya Technology's.
Paul Asher, UK and Ireland business development manager at ValueRAM, a division of Kingston Technology, said DDR2 uptake is slow. "We do not expect things to change until the end of next year, until DDR2 prices drop. DDR2 will account for about 38 per cent of sales by the end of 2005," he said.
ValueRAM does not expect to see parity between the price of DDR and DDR2 DRam until Q3 next year.
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