Prices of DDR DRAM Collapses Down 3 US Dollars

"What is supposed to come has come at last."

Amid the ongoing slump in memory chip prices, the price of 256Mb Double Data Rate (DDR) DRAM has dropped below the three dollars mark. Against this backdrop, tensions are running high in the semiconductor industry.

256 MB DDR 266 (32M X8 266MHz) DRAM, a main product on the memory market, was traded on the Asia spot market around 2.85 – 3.30 dollars on Feb. 18. The average trading price dropped 2.30% from the previous day to 2.97 dollars, an all time low. It was traded at the six-dollar level as late as early this year, but it dropped to the two-dollar level in two months.

Ñ 256 MB DDR DRAM price below the three-dollar level = The 256 MB DDR 266 DRAM price continues to show a downward movement, collapsing below the five-dollar mark on Jan. 23, the four-dollar mark on Feb. 7 and then, the three-dollar mark in 11 days.

According to DRAMeXchange, memory chip e-marketplace, on the same day, 256 MB DDR 333 DRAM and 256 MB DDR 400 DRAM were traded on average at 3.68 dollars and 4.87 dollars, down 1.60% and 3.37% from the day before, respectively.

The price of synchronous DRAM (SDRAM) 16 MB module 256 MB 133, which is almost the same as the DDR DRAM price because of its short supply, fell 0.93% from the day before.

Ñ Where is the bottom? = Eyes in the chip industry are on when the downward movement will bottom out. If chip prices go down further, a vicious circle of bankruptcies of companies that could not bear the cost burden, is expected. Chip experts see that amid this situation, a market correction is likely for the current five-dollar price level in the long-term supply.

A dominant prediction is that with the collapse of 256 MB DDR DRAM below the three-dollar mark, the slump will end.

Min Hu-sik, a chip analyst with Dongyang securities, predicts, "School year starts, demand for PCs is expected to rise, and companies that cannot prop up excessive production by below cost sale cannot but reduce their output. So memory chip prices are likely to be stabilized at the two-dollar level."

Samsung Electronics and Hynix Semiconductor plans to overcome the current crisis head on by reducing costs and increasing the share of high performance products. They are going to increase the production of high value-added products such as smart chip, flash memory, and high-speed DDR memory continuously.

An official with Samsung Electronics said, "If the company produces 300 mm wafers, which can increase output twice, its competition will increase in terms of costs, and profits will follow."

Tae-Han Kim freewill@donga.com