Olympic Games torch DRAM market

Beijing's window dressing ahead of the Olympic Games has crimped DRAM imports to the country, sending prices lower.

Just when it didn't seem like things could get any worse for the global DRAM market, a Chinese crackdown on pirated goods ahead of the Olympic Games has sent chip prices even lower.

But while that may be bad for DRAM makers, it's great news for IT managers and anyone else who might need more of the chips to improve system performance.

When DRAM prices go down, PC vendors tend to add more of the chips to systems or offer additional DRAM as an incentive. DRAM makers also tend to hurry new, more profitable technologies to market during downturns.

DRAM chips are a PCs main memory and are vital to system speed.

Chinese import restrictions ahead of the Beijing Olympic Games have hurt DRAM spot market demand, pushing prices lower, said Eric Tang, a vice president at Powerchip Semiconductor, Taiwan's largest DRAM maker.

China is home to the world's largest spot DRAM market, so a crackdown on pirated electronics goods that slows imports can have a big impact on DRAM prices.

Market researcher DRAMeXchange Technology said Chinese authorities want to clean up pirated goods ahead of the Olympic Games as part of its mission to eliminate activities that may tarnish Beijing's image during the event.

The price of the most widely used DRAM, the 1G-bit 667MHz DDR2 (double data rate, second generation) chip, fell to as low as US$1.78 on Tuesday. The price is below the cost of production for most DRAM makers and the pain is being seen in their quarterly earnings.

German DRAM maker Qimonda AG, for example, reported a net loss of Euro 401 million (AUD$676 million) in the quarter ended June 30, its fifth straight quarterly loss. The company blamed a 45 percent decline in average selling prices, in part, for the loss. Micron Technology of Boise, Idaho, reported a US$236 million loss in its most recent quarter.

iSuppli, of El Segundo, California, blames bloated DRAM inventories for the price declines. The market researcher notes that DRAM shipments rose 15 percent in the second quarter, much higher than the anticipated 10 percent increase.

Contract prices for DRAM chips could fall by as much as 10 percent over the next few months from current levels due to the supply glut, iSuppli said. Around four fifths of all DRAM are sold by contracts between PC vendors and DRAM makers, while the remaining 20 percent are sold on global spot markets.

It's hard to say when the DRAM business will improve.

While most DRAM makers plan to cut back on installing new production lines, the two biggest companies in the business, Samsung Electronics and Hynix Semiconductor, continue to aggressively improve production technology and increase output, iSuppli said. Their efforts could delay a DRAM price recovery until the second half of 2009.

Join the newsletter!

Error: Please check your email address.
Rocket to Success - Your 10 Tips for Smarter ERP System Selection
Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Dan Nystedt

IDG News Service
Show Comments

Cool Tech

Breitling Superocean Heritage Chronographe 44

Learn more >

SanDisk MicroSDXC™ for Nintendo® Switch™

Learn more >

Toys for Boys

Family Friendly

Panasonic 4K UHD Blu-Ray Player and Full HD Recorder with Netflix - UBT1GL-K

Learn more >

Stocking Stuffer

Razer DeathAdder Expert Ergonomic Gaming Mouse

Learn more >

Christmas Gift Guide

Click for more ›

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Walid Mikhael

Brother QL-820NWB Professional Label Printer

It’s easy to set up, it’s compact and quiet when printing and to top if off, the print quality is excellent. This is hands down the best printer I’ve used for printing labels.

Ben Ramsden

Sharp PN-40TC1 Huddle Board

Brainstorming, innovation, problem solving, and negotiation have all become much more productive and valuable if people can easily collaborate in real time with minimal friction.

Sarah Ieroianni

Brother QL-820NWB Professional Label Printer

The print quality also does not disappoint, it’s clear, bold, doesn’t smudge and the text is perfectly sized.

Ratchada Dunn

Sharp PN-40TC1 Huddle Board

The Huddle Board’s built in program; Sharp Touch Viewing software allows us to easily manipulate and edit our documents (jpegs and PDFs) all at the same time on the dashboard.

George Khoury

Sharp PN-40TC1 Huddle Board

The biggest perks for me would be that it comes with easy to use and comprehensive programs that make the collaboration process a whole lot more intuitive and organic

David Coyle

Brother PocketJet PJ-773 A4 Portable Thermal Printer

I rate the printer as a 5 out of 5 stars as it has been able to fit seamlessly into my busy and mobile lifestyle.

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?