DRAM Market Crashes

The DRAM market has crashed — at least temporarily — as average selling prices (ASPs) have already fallen by 30 percent since the beginning of this year.

DRAM prices were projected to fall by 31.3 percent for the entire year of 2007, but ASPs have fallen by that much alone since January, said Brian Shieh, president of Powerchip Semiconductor Corp., a Taiwan supplier of memories.

Poor demand and seasonal factors prompted the DRAM crash, causing vendors to cut prices at an alarming rate. On the spot market, ASPs were down by an average of 4.8 percent across all densities for the week ended Feb. 2, standing at $4.90 on a 512-Mbit equivalent basis, according to Gartner Inc.

That is the first time ASPs have fallen below the $5 level in the past six months, according to the research firm.

In a presentation, Shieh believes that the ASP lull is only ''temporary,'' as demand is expected to pick up after Chinese New Year.

In total, the DRAM market is expected to hit $36 billion in 2007. In comparison, DRAM prices fell by 12.5 percent in a banner year for the products in 2006.

The DRAM market hit $34 billion in 2006, up from $25 billion in 2005, he said during a presentation at Taiwan+China Semiconductor Outlook event here on Wednesday (Feb.7).

Others see a brighter outlook. ''We're going into a season that is soft,'' said Bill Lauer, director of marketing at Micron Technology Inc., in a recent interview. ''The good news is that Vista was launched. That bodes well for the memory market. Demand is going to be strong in the second half.''

Newly released sales information for the week ending Feb. 3, indicates that U.S. retail consumers warmly embraced Microsoft's introduction of Vista. Vista was available pre-installed on retail PCs for the first time on Jan. 30, according to Current Analysis.

Overall PC unit sales for the week ending Feb. 3, jumped 173 percent when compared to the previous week and increased 67 percent year-over-year, according to the firm.

"This sales spike is a welcome sight for retailers, given that the preceding five weeks had seen sagging sales for PCs," according to the firm. "This slowing was primarily due to a limited amount of inventory, as retailers and OEMs chose to keep their supply of non-Vista products limited in preparation for the Vista transition.''

DRAMs are not the only market in trouble. Prices for NAND flash memory chips are projected to crater this year, tumbling by a whopping 65 percent and prompting whispers that this once high-margin technology could soon become a nearly free commodity.