256-Megabyte DDR Price Reaches 4.78 Dollars

“Just about the same as last year” – this statement seems like wishful thinking by those in the semiconductor industry who are anxious to see a steep rise in DRAM prices.

The prices have been steadily rising since May, but failing to reach the point recorded earlier this year.

As of today, the price of the 256-megabyte DDR DRAM stood at 4.78 dollars (266MHz) in the Asian real market, not up to the point of an average price of 5.20 dollars for January.

Will it continue to rise?

Samsung Electronics and Hynix Semiconductor raised a fixed price of DDR DRAM by 8 to 12 percent this month. As the daily-changing prices keep rising, they have had to readjust their own prices for supply products to the PC industry.

Samsung Electronics` hikes in the fixed price have occurred four times since late June with the price of the 256-megabyte DDR 266 and 333 recovering to 5.50 dollars and the 400 product line recovering to 6.50 dollars.

The recent hikes in DRAM prices can be attributed to the depletion of DRAM inventories as demand for DRAMs among notebook PC users rises. However, whether the phenomenon will continue is not certain. Experts are divided over the prospect between DRAM demand slowing down this month or greatly increasing with a higher demand for PCs.

Lee Jung, a researcher at Daehan Investment Securities, said, “We are having a high season here right before the fall semester begins. But if manufacturers increase their supplies, the price hikes might halt. DRAM prices would not go beyond 5 dollars in that case.”

PC Economy is a key

Experts agree that PC demand needs to be revived if the DRAM business is to recover since PCs account for some 70 percent of the total DRAM demand.

DRAM industries welcome the news that the PC turnout rate has made a reserve turn from a rapid rise to a slower rate with the start of the third quarter. There are high expectations about the advent of a new era of massive PC upgrades in the three years since the Y2K boom at the end of 1999. Song Myung-sup, an analyst at Meritz Securities, said, “If Intel’s Springdale chipsets become popular, there might be a lack of supply due to the increased usage of memory per PC.”

However, future prospects for the IT industry are not very bright. According to Semico Research, the predicted growth rate for the semiconductor industry has been revised down to 10.7 percent from 17 percent.

Lim young-mo, a senior researcher at the Samsung Economic Research Center, said, “Businesses need to consider a strategy whereby they introduce DRAMs in IT products through alliances with cell phones or digital home appliance manufacturers.”

Tae-Han Kim freewill@donga.com