DRAM prices will continue to rise

Citing a dramatic increase in average selling prices coupled with a slight increase in consumer demand for PC memory upgrades, market research company iSuppli has raised its forecast for the DRAM market.

DRAM revenue in 2002 will increase more than 55% from 2001, according to the research firm. The company is predicting revenue will total more than $34 billion, a significant upgrade from its projections in January of flat revenue growth.

"Consolidation within the DRAM business over the past several months allowed suppliers to rein in excess production capacity very rapidly to better match the continuing uncertain demand patterns," said Nam Hyung Kim, senior memory analyst.

"In just the month of December 2001, aggregate ASPs rose more than 20% for most products and continued to increase through January and February 2002 at remarkable rates."

Contract unit prices for 128Mbit single data rate DRAM purchased by major PC manufacturers exceeded $9 in March 2002, Kim said, almost triple the ASPs for the same components in November 2001.

"Product mix had a lot to do with this increase in that suppliers shift significant factory capacity into the production of double data rate DRAM in anticipation of the introduction of [Intel's] new, highly graphic integrated chipset, 845G," Kim said. "With these Intel chipset yet to hit the market, OEMs have not switched to the faster and more cost effective DDR parts and a temporary shortage is beginning to develop in the SDRAM marketplace."