DRAM industry suffering from lowering prices, curbs output
Taipei (Taiwan) - DRAM makers are in the midst of a serious price crunch, and one that's showing no signs of letting up. In an attempt to keep the prices from falling even further, DRAM makers are planning on reducing the supply to what are called "spot markets", in an attempt to stabilize prices and keep drastic price drops from occurring.
Pricing of 512 Mb DDR2-667 chips are at $0.88, while 1 Gb chips of the same are at $1.75. Spot pricing for 512Mb DDR2 in 64 Mb x 8 configurations came in at $0.93 while 1Gb chips of the same were at $1.91, as of December 28, according to DRAMeXchange. To put these numbers in perspective, in January of 2007, 512 Mb pricing was at $5.88. In September, 2007, 1 Gb pricing was at $3.00 in an already declining market where 512 Mb chips had fallen to $1.75.
This would be the equivalent of a $20,000 car in January now selling for $2,994. Car companies could not continue doing business if that were the case, and the DRAM industry is facing a similar problem. It's gotten to the point where the memory makers are not selling their products in the markets and are, instead, stockpiling them in inventories waiting for the prices to turn north again. This necessarily means they are artificially shutting down the supply chains, telling buyers that there isn't enough product to meet demand. It's a vicious tactic, but it may be one of the only possibilities of keeping this industry afloat.
Read more ... Digitimes.