World DRAM prices slide and further falls predicted

Spot prices for DRAM (dynamic random access memory) chips on the world market fell sharply last week and look set to continue moving downward amid market conditions some observers describe as “crazy.”

The spot price for benchmark 64M bit DRAM chips, which had been as high as US$9 per chip in mid-2000, was hovering just above the $2 mark at the end of last week, while benchmark 128M bit DRAM chips were priced around $4.50 to $4.40 per chip, said Steve Tan, an analyst at the Singapore offices of memory chip market data provider Independent Commodity Information Services – London Oil Reports (ICIS-LOR).

“This market is really crazy now,” said Tan. A slight rally in prices mid-week failed to gather momentum. “It’s gone back down again – I think it was a slight correction. From what I gather, if the 128M bit prices hit $4.10 to $4.20, the 64M bit will probably go down to $2.”

At blame for the continued weakness is bad sentiment in the market, said Tan. He said market rumors, whether true or not, that major players LG Electronics Inc., Hyundai Electronics Inc. and Micron Technology Inc. have significant inventory and are dumping it in the market has been depressing prices.

In the near term, he expects prices to continue falling as traders remain wary of the market.

“We all though that $2.40 to $2.50 would be the lowest (for 64M bit chips) and that’s why some of the traders bought at that price. Then it started going down again so now they’re just going to stay out of the market and wait for it to go below $2,” he said. “$1.50 to $1.60 may be the new bottom.”

Memory chip companies are already losing money at the current levels and few are willing to comment on the state of the market and where prices may be heading.

“We’ve learned from the 16M DRAM that there is no limit,” said Aston Bridgman, a spokesman for NEC Corp.

ICIS-LOR, in London, is at