Memory-chip prices set to rise with DRAM demand in Q2

Orders from contract PC makers would raise commodity prices

Taiwan’s largest computer memory chipmaker on Tuesday forecast a jump in demand for its components in the second quarter of the year as orders from contract computer manufacturers pick up, heralding an all-but-certain DRAM price hikes.

Powerchip Semiconductor Chairman Frank Huang said that between April and June demand for DRAM -- dynamic random-access memory -- would exceed supply, Taiwan's Economic Daily News reported.

"Based on what our OEM clients tell us, we would forecast second-quarter growth,” said Powerchip spokesman Eric Tang. “But the picture is changing very fast, so we don’t have any solid figures yet.”

If memory chip prices rise, computer prices would follow, analysts say. Earlier in the month, prices for commodity 1Gb DDR3 DRAM chips fell to a one-year low, close to their cheapest ever, due to post-holiday oversupply.

PC makers typically spend about 10 percent, or $20 to $36, of a PC's total manufacturing cost on DRAM. Lower DRAM prices sometimes motivate PC manufacturers to cut prices or to offer improved performance for the same price by adding more memory, the amount of which is key to the overall performance of a computer.

Prices had dropped to an average of $0.84 per unit from around $2.80 in April and May last year, according to the Taipei-based trading platform DRAMeXchange. But they are due to rise 20 to 25 percent in the second quarter "mainly because of an increase in content per box, stock inventory, and overall demand," it said in a statement on Tuesday.

"We think the prices are pretty much at the lower end, because prices are almost at the cash cost and very close to the lowest point of last price decline," the statement said.

In mid-2010 demand for the memory chips raised fears of a supply shortage.

Powerchip, with an annual capacity of 130,000 wafers, shares the world DRAM market with other major players such as Elpida Memory, Micron Technology and Samsung Electronics.

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