Technology development justifies memory price hikes

JOHANNESBURG (04/01/2004) - The recent price hikes of 25 percent and more associated with memory modules are justified, in the light of new technological developments and changes in manufacturing techniques, according to Rectron Ltd. CEO, Mark Lu. Lu says that many industry watchers have been expecting the hikes, and have made plans accordingly.

"While vendors such as Dell (Inc.) and HP (Hewlett-Packard Co.) have foreseen the swing in the market, their actions in overstocking on Dramatic Random Access Memory (DRAM) products have exacerbated market shortages, and spiked prices on the DRAM spot market," he adds. "This has impacted negatively on manufacturers, vendors and resellers who did not make the necessary arrangements."

Lu maintains that changes from 0.13 micron to 0.11 micron circuit sizes (nearly one thousandth the thickness of a human hair) in the manufacturing process of microprocessors are one of the causes of market shortages, and consequent memory product price rises.

In addition, he says certain manufacturers are shifting their focus to inexpensive flash memory, which has worsened the DRAM supply position.

Commenting on this, Lu says it is quite normal for vendors to begin with low output volumes when introducing new technologies, and then ramp up production as soon as they are confident that the process is stable.

He maintains that high prices will be the norm in this sector of the market until the supply of DRAM returns to normal, probably about mid year.

"All industry watchers are hoping for this to materialize as the Olympic Games, which starts in August, will spark increased PC, laptop, PDA and new technology cellphone and hand-held device sales -- putting the DRAM producers under even greater pressure to boost their output volumes," he concludes.

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