Spot Price for 64MB DRAMs Sinks Below $US6

The spot market price for 64MB, PC133 DRAM (dynamic random access memory) chips dropped around 10 per cent Thursday. In one of the steepest one-day declines seen recently, by the end of the day 64MB, PC133 DRAMs were selling at an average of $US5.61 per chip, according to the American IC Exchange (AICE), an online exchange for memory chips and other semiconductor devices.

From a high of $US8.91 reached during June, the price began falling in mid-July to settle at around $US8.50 before rapidly heading south during a six day period beginning September 13, when the price dropped from $US8.25 to $US6.85.

As the price for the chips fell, so did pricing for memory modules containing the chips. According to AICE, the price of 128MB PC133 modules dropped 13 per cent Thursday to $US98.80 per module, down from $US146 per module in July and below the $US100 mark for the first time since May.

"It's going to be painful [for the DRAM makers]," said Eric Ross, vice president of semiconductor research at Thomas Weisel Partners. Despite the downward pricing trend, however, optimism still reigns in the industry, Ross said. "Major DRAM manufacturers are all speaking about how the demand seems to be very good and they are expecting to see the DRAM price increase."

Earlier this month, Tokumasa Yasui, executive vice president of Elpida Memory, the new joint venture DRAM maker formed by NEC and Hitachi said he expects to see the market improving soon. "Maybe the market direction will be clear in October. I think in October or November prices will increase," Yasui said.

Most of the DRAM makers are betting on prices rising as seasonal orders for memory chips are received. So far, however, much of this demand has not surfaced yet.

"Generally, what happens in a normal year is that you'd see the back to school PCs being built in September [for the northern hemisphere market] and components bought for them in July and August," said Ross. "Then there's December, which is a bigger season. They are expecting to see DRAM bought in time for December but we have not yet seen the big buy yet."

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