Plummeting DRAM prices could spell a bonus for manufacturers and consumers in the short term, but leave a question mark over the long-term outlook for the DRAM makers.
The latest figures from analyst iSuppli, revealed that the contract price for a 2GB DDR3 DRAM module stood at $21 (£13), a 50 per cent drop on the price six months ago.
Previous generation DDR2 devices also decreased in value to $21.50 in December, compared with $38.80 six months ago.
As a result, PC manufacturers are stuffing their machines with more DRAM, with content per PC growing by 24 per cent in 2010 and is forecasted to expand by more than 33 per cent in 2011.
Mike Howard, principal analyst for DRAM and memory at iSuppli, said: “DRAM prices in general have been affected by soft PC demand – especially during the first half of 2010 – as well as by greater supply of commodity memory following a solid increase in bit shipments during the second half.
“That lethal combination of falling demand and growing supply has coalesced to place a great deal of pressure on DRAM ASPs,” he said.
However, Howard said DRAM pricing appears to be reaching critical levels, with nothing set to stop prices continuing their slide during the next six months.
This could lead to DRAM manufacturers facing the conundrum where costs exceed prices and could force them to cut down on production.
“The dynamic that bears watching in the coming months will be how far DRAM companies can stay ahead of costs in order to maintain normal operations,” he added.
“With leading DRAM processing already at the 3x-nm node, working in the older, less efficient 6x-nm and 5x-nm nodes will not be as cost effective during the coming months, and higher costs and shrinking margins will be incurred as a result.”
iSuppli predicted DRAM prices will continue their descent for at least the first half of 2011, with 2GB DDR3 nodules dropping to less than $15 by the end of Q2.
The balance between supply and demand is expected to be more favourable at the end of the second half of next year, which could temporarily slow down or halt the drop in prices, iSuppli predicted.
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