DRAM prices may hit speed bump on way down

Strong holiday sales could temporarily deplete inventory, but chipmakers continue to supply the market with too much memory, ensuring prices will resume their slide swiftly

Users should not be fooled by a possible stabilizing in DRAM prices in coming weeks because it's only a speed bump on the way down, analysts say.

Strong online sales after the Thanksgiving holiday in the United States could mean some renewed need for inventory restocking at DRAM and NAND flash memory houses, according to DRAMeXchange Technology, a Taiwanese company that runs an online DRAM market.

But while restocking may give DRAM sellers a short respite from falling prices, chipmakers continue to supply the market with too much memory, ensuring prices will resume their slide swiftly, DRAMeXchange said.

Other analysts see DRAM prices continuing to drop for a while.

"Today's DRAM price drop is not about to end -- it has just begun," said Jim Handy, memories analyst at Objective Analysis, a chip industry researcher.

Analysts and industry players have predicted that prices may not rebound until the second quarter of next year.

Until then, users should see bargains on DRAM modules that can easily be added to their PCs, as well as offers for additional DRAM as an incentive to buy new computers.

The contract price of 1Gb, DDR2 (double data rate, second generation) DRAM chips that run at 667MHz fell 5.3 percent from two weeks ago to $2.25 each, a new low for this year according to DRAMeXchange. Prices of the chips were at $3 at the start of October, when the price slump hit.

ComScore, an online data tracker, reported that the holiday shopping season kicked off to a strong start online last Friday, "Black Friday," with sales up 22 percent year on year to $531 million, followed by a similar surge on Cyber Monday, a $733 million online shopping record for a single day.

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