Neowin.net

A sudden spike in 256Mbit double-data rate SDRAM supplies sent contract prices plummeting 17% in June, making it the best memory chip value on the market.

At an average selling price of $6.69, OEMs are paying 25% more for 256Mbit DDR vs. 128Mbit DDR devices, but are getting twice the density, according to Semico Research Corp., Phoenix. Three months ago, 256Mbit DDR ASPs peaked at $9.34.

However, Ken Hurley, president of Nanya Technology Corp. USA, San Jose, believes 256Mbit DDR pricing has started to stabilize in the last week.

At the same time, contract prices for the previous-generation 128Mbit DDR are on the rise, increasing to $5.35 in June, compared with $1.78 last November. 128Mbit single-data-rate SDRAM tags have also been creeping up, jumping to $4.57 in June from $1.45 in November.

News source: EBN - Buyers enjoy fire sale in 256Mbit DRAMs

Shifting to 256Mbit

The rapidly shifting pricing pattern is attributed to a surge in 256Mbit output, as many chipmakers switched a large share of production capacity from the older 128Mbit devices.

DRAM suppliers ramped up 256Mbit DDR output at the end of last year to meet higher demands from OEMs gearing up for Intel Corp.'s shift to DDR memory for the Pentium 4, according to Sherry Garber, an analyst at Semico.

“They kept the same output ratios for the spring and early summer, when the PC market softened considerably. This is creating a surplus of 256 DDR in the market that probably will continue in the traditionally slow mid-summer,” Garber said.

Samsung Electronics Co. Ltd. confirmed that 80% of its DRAM unit production is now in the 256Mbit generation, both single- and double-data rate. And a spokesperson for Nanya Technology USA said that 256Mbit DDR chips “will shortly be predominant” in the production mix of Taiwan's DRAM makers.

Micron Technology Inc. and Elpida Memory Inc. are still running a majority of unit output in older 128Mbit densities, but both are rapidly shifting to the 256Mbit generation.

Aggressive die shrinks will yield more 256Mbit supply and reduce production costs for DRAM vendors, said Jim Sogas, vice president of sales and marketing at Elpida America, who said all future die shrinks will be on 256Mbit wafers.

However, Mike Sadler, Micron's vice president of sales and marketing, said “there is probably one more die shrink left in the 128Mbit generation.”

Notebook market ups orders

The notebook PC market has been increasing 256Mbit DDR chip orders each month since the first of the year, Sadler said. Sustained price erosion in the 256Mbit DDR market is likely to continue motivating OEMs to increase notebook memory content, just as they have for desktops, he added.

The average memory content in a notebook PC now stands at 215Mbytes, according to DRAM executives.

“The 256-Meg offers a unique option to notebook OEMs by making possible a single 256Mbyte SO-DIMM and consequently a 256Mbyte main memory in a single slot,” Sadler said.

Samsung has an option to package its 256Mbit devices in a shrink-TSOP, which doubles the memory in an SO-DIMM and makes possible a single module 512Mbytes in size, said Tom Quinn, senior vice president of sales and marketing.

Although notebooks account for a minor share of the DRAM market, their share is growing faster than desktops and therefore driving the demand for 256Mbit devices, Quinn added.

On the spot

Notebook vendors typically negotiate DRAM prices directly with vendors and don't traditionally buy in the spot market, where pricing has been more volatile, Quinn said.

The spot market comprises only 20% to 25% of the DRAM market, according to Sadler, who suggested that prices swung more widely due to lower sales activity.

“The 256Mbit single-data-rate PC133 rose abruptly from $5.10 on Jan. 2 to a peak of $14 on Feb. 19,” said Grant Johnson, manager of marketing intelligence at Converge Inc., an excess-inventory exchange in Peabody, Mass. “However, the price on the 256Mbit part dropped to $5.50 on June 25.”