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Slump in DRAM, NAND flash prices lingers

Posted: 05 Sep 2008 ?? ?Print Version ?Bookmark and Share

Keywords:storage market? DRAM? NAND flash?

DRAM and NAND flash contract prices continued to fall in August, according to market researcher Gartner Inc. NAND flash prices across all densities fell because of weak demand, high inventory and oversupply.

Prices for mainstream multilevel cell (MLC) 8Gbyte and 16Gbyte parts declined 11 percent and 23 percent, respectively, while global DRAM contract pricing dropped after relatively high prices from April to June. Gartner says mainstream 1Gbit DDR2 prices dropped by 14.6 percent to $2.05, while pricing for 512Mbit parts was down by 7 percent. The older devices saw some further pricing declines as well.

Gartner reports that DRAM spot market pricing has been edging down for weeks while contract market pricing stayed relatively firm after experiencing price increases from April through June. However, with fear of undersupply in late Q3 08 and Q4 08, major PC OEMs are now burning off inventory that was accumulated during Q2 08, which has reduced demand and led to the price declines.

Falling prices reigns
Module pricing fell to $19 and $38 for the 1Gbyte and 2Gbyte configurations, respectively, in late August, with the expectation that pricing in 1H September will see further declines. Some market participants are anticipating prices falling back during the next two months to the low point seen in April 2008, with the 1Gbyte module reaching $16 and the 2Gbyte possibly going as low as $32. Gartner expects any OEMs holding inventory will be quick to offload it with the expectation that pricing will decline further.

Spot pricing for DRAMs experienced its biggest weekly drop since the start of November 2007, according to Gartner. Average spot pricing across all densities and technologies was down 8.6 percent compared with the previous week, standing at $1.82 on a 1Gbit equivalent basis. Mainstream 1Gbit parts saw the strongest declines, with high-end pricing ranging down by 12 percent. The 512Mbit part also saw strong declines.

Positive projection
Gartner projects a strong revenue rebound by 2009, up 25.1 percent, but this is based on "mild" pricing declines in 2009 compared with the unsustainable pricing environment experienced in 2008. By 2011, the industry will likely enter a capacity-induced recession, according to Gartner's latest DRAM forecast.

"Similarly, NAND flash contract pricing continues on its own downward spiral. This is what is typically considered a seasonally good time of the year, especially after three consecutive months of an oversupply situation," said Gartner. The problem is high inventories at vendors and customers because of stagnant end-consumer demand.

The 8Gbit and 16Gbit MLC NAND parts saw the biggest price declines. "While 3bits/cell NAND flash did enter the market recently, it has had a negligible impact on pricing because the cost advantage is not strong enough when produced at 56nm," it added.

NAND flash spot pricing also continues to slide. Lower prices were led by the commodity 8Gbit and particularly the 16Gbit MLC parts, whose low-end range of pricing fell to $2.25. On a weighted 1Gbyte average, spot prices sunk more than 4 percent to stand at $1.53.

In contrast, Gartner said NOR flash memory pricing kept stable in August, after declining continuously for four months, with a range of 0.9 percent to negative 3.4 percent across all densities compared with July. The application for NOR flash is the cellphone sector, which requires 128Mbit to 256Mbit densities; however, demand is decreasing with the use of NAND flash for data storage and code execution in the high-end handsets. Prices for 256Mbit NOR flash declined 0.03 percent to $3.98.

-Gina Roos

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