Apple DRAM demand set to push PC prices higher

Cash-rich Apple could be about to set the memory market into a spin as it pre-orders nearly $4 billion in components for use in its mobile gadgets and Mac computers over the next two years.

The Cupertino company is sitting on close to $60 billion in cash reserves and, as such, can afford to snap up component contracts when they are at their cheapest, artificially distorting the market and forcing other OEMs to either pay more for their products, or risk scrambling about the far east at the last minute desperately trying to meet demand.

Apple's temporary helmsman Tim 'Captain' Cook recently announced that the company had inked long-term component contracts with various suppliers to the tune of $3.9 billion. The company is well known for hedging its bets when it comes to snapping up DRAM memory while it is at the bottom of its pricing fluctuations, having snapped up practically all of Samsung's output in 2005 in a deal worth close to a billion dollars, a move which sent waves throughout the industry.

Now Taiwan's largest memory chip maker is predicting that demand for memory components will hit an all-time high as Apple sucks inventories dry, leading to inevitable price hikes, according to PC World.

Although Powerchip Semiconductor is not thought to be on Apple's supplier roster, the fact that the Cupertino company has rolled into town brandishing giant wads of cash will still have an impact on prices because, if history repeats itself and Apple does commit to buying everything Samsung's production lines can churn out, the Korean company's smaller customers will have to go elsewhere.

Which is good news for Apple, good news for smaller DRAM suppliers, and good news for Samsung, but bad news for PC buyers.

Something close to ten per cent of the retail price of a PC goes on chip-based memory, so a hike in the price of DRAM will inevitably trickle down into the consumer market.

With DRAM prices predicted to soar by anything up to 25 per cent in the second quarter of 2011, and with fears of a shortage starting to raise their heads as they did back in 2010, it's only a matter of time before Dell, HP and their ilk start passing the price rise on to the High Street.