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DRAM price drops to continue in H1 2011

Posted: 05 Jan 2011 ?? ?Print Version ?Bookmark and Share

Keywords:DRAM? market analysis?

iSuppli forecasts that DRAM and DRAM module prices will continue to go down in the first half of this year.

This good news for PC makers is likely to prompt them to increase the amount of DRAM they include in their machines by about a third in 2011, iSuppli said.

As of Dec. 10, the contract price for a 2-Gbyte DDR3 DRAM module was $21.00, down more than 50 percent from $44.40 six months before. The 1-Gbyte DDR3 DRAM module had fallen to $11 from $23.20 over the same period.

DDR2 DRAM modules have also fallen over the previous six months by similar amounts to $12 and $21.50 for the 1- and 2-Gbyte DRAM memory modules, respectively.

DDR3 counts for more than 60 percent of DRAM bits shipped during the fourth quarter, according to iSuppli. "That lethal combination of falling demand and growing supply has coalesced to place a great deal of pressure on DRAM ASPs [average selling prices]," said Mike Howard, principal analyst for DRAM and memory at iSuppli, in a statement.

The decline in prices means that it has become less expensive for PC makers to include more DRAM. DRAM content per PC, which grew by 24 percent in 2010, is forecasted to expand by more than 33 percent in 2011. As long as DRAM costs equate to less than 10 percent of the ASP for PCs, manufacturers will continue to increase the memory content in their computers.

DRAM price free-fall
Nothing is likely to stop prices from continuing their slide during the next six months, Howard said.

This is despite the fact that as DDR3 goes below $1 per gigabit, for DRAM manufacturers operating at the 60-nanometer (nm) process node the price will be lower than the cost of manufacture. When prices dropped below $1 per gigabit in 2008 manufacturers with lagging process technology were forced to throttle down production.

"With leading DRAM processing already at the 3x-nm node, working in the older, less efficient 6x-nm and 5x-nm nodes will not be as cost effective during the coming months, and higher costs and shrinking margins will be incurred as a result," said Howard.

As a result iSuppli expects 2-Gbyte DDR3 DRAM modules to be less than $15 each by the end of the second quarter. After that, as some manufacturers throttle back or are forced out, supply and demand is expected to start to rebalance, which could temporarily slow down or halt the drop in prices.

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