DRAM pricing falls by 50% from six months ago

According to iSuppli, prices also have plummeted in the previous generation DDR2 devices which are now $21.50, compared to $38.80 in June. Mike Howard, analyst at iSuppli, reports that prices have fallen faster for DDR3 than for the other varieties of DRAM because of its high volume, accounting for more than 60% of total memory bits shipped during the fourth quarter. Howard said: "In general, however, DRAM prices have been affected by soft pc demand - especially during the first half of 2010 - as well as by greater supply of commodity memory following a solid increase in bit shipments during the second half. That lethal combination of falling demand and growing supply has coalesced to place a great deal of pressure on DRAM ASPs." The decline in prices means that it has become less expensive for pc OEMs to load machines with more DRAM. DRAM content per pc, which grew by 24% in 2010, is forecasted to expand by more than 33% in 2011, iSuppli memory forecasts show. "And as long as DRAM costs equate to less than 10% of the ASP for pcs, manufacturers will continue to increase the memory content in their computers," noted Howard. iSuppli says that DRAM pricing appears to be reaching 'critical levels', and the analyst believes that nothing is likely to stop prices from continuing their slide in the next six months. Howard warned: "In particular, as DDR3 reaches $1 per gigabyte, DRAM manufacturers operating at the 60nm process node will start to face the painful economics of costs exceeding prices. In 2008 when prices dropped below $1 per gigabyte, manufacturers with lagging process technology were forced to throttle down production." Howard suggests that with leading DRAM processing already at the 3x-nm node, working in the older, less efficient 6x-nm and 5x-nm nodes will not be as cost effective during the coming months, incurring higher costs and shrinking margins as a result.