PC memory prices rise as gadget memory prices drop

PC memory chip prices are on the rise, while NAND flash memory, used in MP3 players, USB flash drives and digital cameras, is falling.

The price of advanced computer DRAM (dynamic RAM) chips is on the rise while NAND flash memory is falling, meaning PCs might be a tad more expensive in coming months, but users could find bargains among a range of consumer electronics, such as MP3 music players.

There's a rare shortage of DRAM in the market these days, according to DRAMeXchange Technology, a Taiwan-based company that operates an online clearinghouse for memory chips. The cause of the supply shortfall is mainly greed: too many producers have focused on higher-margin NAND flash memory, while ignoring the DRAM market. The result is there's a glut of NAND flash, which is why prices of the digital camera, USB flash drive and MP3 player memory chips are falling, and not enough DRAM.

The spot-market price of the most actively traded DRAM chips, 512M-bit double data rate 2 chips that run at 533MHz, or DDR2-533, has risen over 25 percent so far this year, to US$4.69 each, up from US$3.75 at the start of the year, according to DRAMeXchange. What's worse, the Taiwanese company says prices are likely to remain strong throughout the entire first half of the year -- because it will take manufacturers a while to increase production.

Higher prices for DRAM hurt users because most PC companies tend to handle the situation in one of two ways, either raising PC prices to reflect higher component costs, or reducing the amount of DRAM in each PC, which slows performance.

The situation is a little better for users buying lower-cost PCs, or anyone who wants to increase the amount of DRAM in an older PC. There's still plenty of the former mainstream DRAM chip, 256M-bit DDR that runs at 400MHz, or DDR-400, so prices haven't risen as much. The chips are up only 13 percent so far this year to US$2.39, after starting at US$2.11, according to DRAMeXchange.

In NAND flash memory, disappointment is hurting prices as much as the plentiful supply. A number of companies started dumping NAND flash memory on the open market in South Korea after being jilted by the lack of a catalyst from Apple Computer Inc. Traders had been expecting Apple to debut a laptop using NAND flash memory during the recent MacWorld event, DRAMeXchange said, but that didn't happen.

The ensuing sell-off sent prices of 16G-bit flash down by almost 5 percent to US$73.26 as of Tuesday, while 4G-bit, 2G-bit and 1G-bit prices fell 3.1 percent, 3.9 percent and 1.3 percent, respectively, to finish at US$20.85, US$14.20 and US$7.62 per chip, DRAMeXchange said.

Users looking for new multimedia cards to put in their digital cameras, or new MP3 players that hold more songs could benefit from a little patience, since waiting a short while could pay off in bigger bargains. DRAMeXchange said price declines should continue for NAND flash, since companies such as Samsung Electronics continue to rapidly increase production of the chips.

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Dan Nystedt

IDG News Service
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