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Expect DRAM Prices to Increase through the Quarter

Contract prices for two and four gigabyte (GB) DRAMs have increased in May, and upward price pressure on DRAMs should continue through the first half of the year because of rising demand.

Contract prices for 2GB DDR3 DRAMS increased 2.74 percent on average in the first half of May, rising to $18.75 from $18.25 in February, according to researcher DRAMeXchange. The average DDR3 4GB contract price increased by 2.82 percent to $35.50.

One reason for the increase is that some DRAM manufacturers makers had yield issues while transitioning to 40 nm process technology. Fearing disruption in DRAM deliveries, some large PC OEMS turned to other DRAM suppliers to avoid potential disruption in their computer production plans. Those companies consented to somewhat higher prices, according to DRAMeXchange.

Price should continue to increase through the end of the second quarter, especially for commodity DRAMs.

DRAM makers are shifting their capacities to mobile and server DRAMs to address the rising volume requirements from smartphone, tablet PC, and cloud computing applications. That shift means less supply of commodity DRAMs, which could cause upward price pressure depending on the strength of demand, according to DRAMeXchange.

Prices could also rise because two DRAM suppliers had poor yields on 40 nm production, which will result in a little less supply.

While supply may diminish, many PC OEMS have begun to replenish DRAM inventory levels after reducing stockpiles earlier in the year. Some OEMS had less than one month of inventory and are now restocking, which will help boost prices, reported DRAMeXchange.