RAM price records 'spectacular' increase

Hot on the heels of the Pentium II shortage, the New Zealand PC market has to face a dramatic increase in the cost of RAM. Prices have typically risen by nearly 50% since July and show no signs of slowing down. Some dealers are reporting one or two price hikes per day. The finger is being pointed at Korean factories now under the control of the International Monetary Fund.

Hot on the heels of the Pentium II shortage, the New Zealand PC market has to face a dramatic increase in the cost of RAM.

"Pricing is going up spectacularly and will probably continue to do so," says Dove Electronics business development manager, Marcus van Gerwen.

Prices have typically risen by nearly 50% since July and show no signs of slowing down.

"A couple of dealers I've talked to are seeing one or two price hikes per day."

Van Gerwen points the finger at the Korean economic situation.

"The Koreans have banded together, saying the prices are too low. A lot of the factories weren't making any money, and now they're under the control of the International Monetary Fund, they're putting their prices up." The majority of New Zealand's chips come from Korea, the rest are sourced mainly from the US or Japan. "They're putting their prices up as well, pretty much across the board."

Van Gerwen says the price hike happens quite regularly, on a yearly basis, but this is by far the worst. "Normally what happens is someone like Hyundai will break away and drop prices, but they're a bit more loathe to do that now."

The constant fluctuation in price is making it difficult for distributors to maintain stock levels. "There is the continual feeling that the price is going to plateau but it doesn't happen. We bring in three or four shipments a week and we're just playing it day by day."

US reports indicate that prices there are on the rise but that the "traditional end-of-year price cuts" should realign prices. Van Gerwen isn't sure that will apply to New Zealand this year. He says the pricing is usually driven by availability but that's not the case this time. This isn't a supply and demand issue — there are lots of units around. It's just that they're so expensive."

Many OEMs are frustrated at the problems in the industry at the moment, according to van Gerwen.

"Not all of them want to go to the Celeron [instead of the Pentium II] and are forced to go to a PII 333 MHz as entry level, which is a bit steep." One interesting spin off of the shortage is a steady demand for the AMD K6 II processor. "There's definite interest in the product and we've got new customers who try it, love it and want more."

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