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DRAM prices set to fall through the floor

Memory makers have been at it again, cutting their own margins by pumping out so many chips the price has fallen through the floor.

Analysts at iSuppli have been trawling through the figures, and are blaming oversupply for a mooted drop in prices.

"After the boom year of 2010, the DRAM market is waking up to 2011 with a hangover," said iSuppli's senior memory analyst, Mike Howard. "With supply exceeding demand, pricing will decline precipitously for the year, causing revenue to decrease."

The industry-watching outfit reckons worldwide DRAM revenue in 2011 will decline to a measly $35.5 billion (£22.52 billion), an 11.8 per cent drop from $40.3 billion in 2010. DRAM revenue grew by 77.5 per cent in 2010 compared to 2009. The next several years after 2011 also will be turbulent for DRAM revenue, iSuppli says, as revenue heads down in the face of ever-declining average selling prices.

The expected uptake of tablet PCs is also bad news for DRAM makers, according to chairman of memory module maker Transcend Information, Peter Su who told Dodgytimes that DRAM devaluation should not solely be blamed on oversupply.

"Tablet PCs change the way people use computers, and are increasingly popular," said Su. "With more tablet-style devices coming along, consumption of DRAM chips could shrink substantially."

What these reports also fail to mention is that DRAM makers were fined millions of dollars last year for having operated a cartel to fix prices over many years and through many continents. One would hope that, having been rumbled once, memory makers might not be able to fix the market and rip off consumers.

And so, what's bad for the goose is good for the gander, as consumers can look forward to cheaper chips this year and next.

"While bad news for suppliers, the retreat in the DRAM ASP augurs well for consumers,” iSupply's Howard said. "The price of a 2GB module currently is less than half its level six months ago, a development sure to lead to higher DRAM content in PCs for 2011 and provide consumers with more memory per machine.

"Furthermore, the new predominant memory configuration in 2011 will be 4GB, to be loaded in half of all desktop PCs, with 2GB systems declining to just six per cent of the total market by the end of the year."