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DRAM Prices Fall Again

Prices for dynamic random access memory (DRAM) dropped 5.5 percent in the second half of June because of weak PC OEM demand and high inventory levels, according to researcher DRAMeXchange.

The average contract price for a DDR3 2 GB DRAM fell 5.48 percent to $17.25 in the second half of June compared to the first half, reported DRAMeXchange. The average contract price for a 4 GB DRAM dropped 5.63 percent to $33.50.

Price declines were even steeper on the spot market.The DDR3 eTT (effectively tested) 2 GBDRAM spot price in June fell more than 20 percent to $1.35 from $1.66 in the first half of the month, according to DRAMeXchange.

Prices had also declined in the first half of June compared to the second half of May.

DRAM demand is softer than last year. Year-over-year DRAM bit growth is 50 percent compared to 58 percent in 2010, and PC shipment growth is only 3.9 percent year-over-year compared to 15.1 percent in 2010, DRAMeXchange reported.

There is concern that PC demand will remain weak in the second half of the year,resulting incontinued soft DRAM demand. To stimulate PC sales, computer companies are offering more competitive pricing. However, PC OEMs are slowing down DRAM content per boxgrowth as a way of controlling unit cost.The level of DRAM content per unit is expected to grow slightly from 3.3 GB in the first half of the year to between 3.6 GB to 3.7 GB by the end of 2011.

Buyers can expect DRAM manufacturers to continue to migrate to smaller process geometries to reduce cost.

For example, Samsung has begun production of DRAMs on 35nm process technology. Hynix is delivering samples of DRAM made on 38nm technology to PC OEMs for qualification. Mass production is expected to begin later in the year. Japanese chipmaker Elpida will be producing DRAM on 30nm process technology by the end of the year.

Using 35nm or 38nm process technology results in more usable chips per wafer and reduces the cost of DRAM.