Users may win big as DRAM prices hit new lows

The good times are over for the world's memory chip makers. Several top South Korean chip makers are stepping up an assault on memory chip prices that could have a far-reaching impact on vendors and end users alike, sources are saying.

Last week in spot markets across Asia, where the bulk of the world's memory chips originate, prices of 4Mbit and 16Mbit dynamic RAMs hit new record low levels at around US$3 and US$10 respectively, analysts say. In March, by comparison, 4Mbit DRAMs sold at more than twice that price.

"From here it looks like DRAM prices are dropping like the proverbial rock," says Matt Cleary, semiconductor analyst at HG Asia's Seoul office in Korea.

As a result, Cleary has put a sell tag on Samsung Electronics, the world's largest maker of DRAMs and a longtime favourite with Korean investors.

Although Samsung officials have reportedly reacted with dismay to Cleary's sell recommendation, the company has announced that it will cut back on production of 16Mbit DRAMs in this year's second half.

The current price drops come on top of about nine months of steadily falling DRAM prices that users now see reflected in lower-priced systems and memory upgrades.

Prices of standard DRAM Single Inline Memomy Modules (SIMMs), for instance, have fallen about 60% since September, according to Akira Minamikawa, senior analyst at market researcher IDC Japan.

This time around, industry sources and analysts say rock-bottom DRAM prices, in combination with dropping prices of other key PC components such as CPUs, will likely continue to bring down prices of PCs or allow PC vendors to offer more powerful models at current prices.

"End users should be happier than clams," says Jeff Weir, spokesman for the Semiconductor Industry Association (SIA), a US trade group based in San Jose, California. Memory now costs about one-half or one-third of what it did a year ago: For instance, 4Mbit DRAM was about US$200, or US$50 per megabit, while last week 8Mbit DRAM sold for US$120, Weir says.

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