DRAM manufacturing costs rise for first time in four years
1 min read
The cost of manufacturing dram increased for the first time in nearly four years during the second quarter, raising concerns about production expenses in the memory industry, according to market research firm iSuppli.
iSuppli's memory pricing and forecasts indicate the average production cost for dram rose to $2.03 per gigabit at the second quarter of 2010, up from $2.00 in the first quarter. The increase represents a 1.2% upswing, but according to iSuppli, it signifies a major departure from the historical trend, which has seen manufacturing costs decline by an average of 9.2% every quarter since the beginning of 2005. The last time dram production costs climbed on a sequential basis was in the third quarter of 2006.
Mike Howard, analyst at iSuppli said the rising production expense in the second quarter comes on top of the fact that the sequential decline in manufacturing cost during the last three quarters has been at lower rate than the long term average of around 1.7%. "And compared to the previous two quarters - when costs fell by a little more than 3% during each period - the trend abruptly reversed course in the recently ended quarter," noted Howard. "Using the first quarter of 2010 as the starting point, if costs had followed their downward trajectory according to historical trends, then costs in the second quarter should have been 21% lower than they actually were."
DRAM manufacturing costs have not declined at normal rates in nine months and there is concern that cost reductions have been bleak during the last three consecutive quarters.
