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DRAM Tags Will Drop in 2012 Despite Production Cutbacks


The average price for a 4 gigabyte (GB) double date rate 3 (DDR3) DRAM module fell 6 percent in the first half of December, while a 2 GB module dropped 3 percent because of overcapacity and sluggish demand, according to researcher DRAMeXchange in Taiwan.

The price of a 4 GB DDR3 DRAM module dropped to $16.50 and the price for 2 GB DDR3 device declined to $9.25.

DRAMeXchange forecasted that the DRAM market will remain in a state of oversupply for the rest of 2011. However, many DRAM manufacturers are cutting back production, and prices should firm sometime in the first half of 2012.

The decline in the price of a 4 GB DDR3 DRAM in 2011 has been dramatic. Since May, the price has dropped 55 percent from $36.50 to $16.50 in December, according to DRAMeXchange.

Due to falling prices, DRAM makers have cut back on wafer starts. Taiwanese DRAM makers have made the largest capacity cuts, from a high of 450,000 starts per month in the first quarter of this year to December’s 250,000 starts per month, a 44 percent decrease.

Production cuts are starting to reduce oversupply and the DRAM industry is moving towards a balance in supply and demand, according to DRAMeXchange.

However, despite production cutbacks prices for DRAMs will continue to fall in 2012. The average price for all densities of DRAM will fall from about $1.86 in 2011 to $1.79 in 2012, according to researcher IC Insights in Scottsdale, Ariz. The price will drop because of the amount of DRAM capacity and lower demand as a result of slower PC unit growth.

“DRAM unit growth is forecast to increase 1 percent in 2012 and bit-volume growth is forecast to be in the mid-40s percent range,” said Brian Matas, vice president of research for IC Insights. In 2011, bit growth was 48 percent.

He added that with reduced PC shipments, DRAM unit volume will not grow nearly as fast as previous years although DRAM content per box will continue to increase.

“DRAM suppliers will trim prices to keep inventory levels from growing, even as they moderate production levels,” noted Matas.

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