Oversupply triggers drop in RAM prices

The price of DDR3 memory chips used in laptops, desktops and servers will drop over the next two months as memory companies try to clear out excess inventory in a slowing PC market, IT research firm IHS iSuppli reported on Aug. 29.

The average selling price of DDR3 RAM with a 2-gigabit density will reach $1.60 later in the third quarter, down from $2.10 today, said iSuppli in a research note. The price of DDR3 DRAM was about $4.70 in the third quarter a year ago.

The price could plummet further, to $1.25 in the fourth quarter, said Mike Howard, an analyst at iSuppli.

A shortfall in PC demand has softened DDR3 memory pricing this year, and PC makers are unwilling to add more memory to computers as they try to increase profitability in the low-margin market, Howard said. Some memory makers will move excess inventory into the market rapidly, which could lead to further price drops.

The DRAM market fell apart during the economic downturn at the end of 2008, resulting in today's oversupply, according to Howard. "It's a double whammy," he said. "PC growth has slowed down and users aren't demanding more memory."

This version of this story was originally published in Computerworld's print edition. It was adapted from an article that appeared earlier on Computerworld.com.

Read more about hardware in Computerworld's Hardware Topic Center.

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