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Speculators ramp up EDO and FPM DRAM prices

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The cry of disbelief, heard not for the first time today, comes from the disillusioned customer, who has just fallen off their chair when you revealed the price of the memory he gladly took from you last week for 30 per cent less. Yes, it's happened again. Memory prices are rising, but not at the normal few points a day rate. The fact is, we’ve seen an overnight rise of over 30 per cent on the price of EDO and FPM DRAM. Those of us in the memory business have seen it coming for a long time -- we have prattled on about impending price rises, but to no avail. The UK customers have or had managed to keep their suppliers' profits to a bare minimum, by being extremely selective with their purchasing. The shortages were bound to come. However, there has been a sudden rush of unexpected demand for these products. Whether it is a short-lived festive boost to the market or a longer upturn in the upgrade market as a whole remains to be seen. With too many suppliers fighting for too little business, and too much product in the market, the buyer was king. Now the king is dead, or perhaps, suffering from a strong bout of the flu. Most DRAM makers concentrate their efforts on leading edge technology like synchronous DRAM, and there are many plus points for being first to market with the largest, fastest products. Innovation commands respect and brings top dollar to their coffers. So what’s happened? FPM DRAM is now very rarely used in new machines. So demand has dwindled and, like all products in this industry, when they reach the end of their life cycles the price rises. EDO and FPM DRAM have long been unprofitable for most manufacturers because the price has been driven down to cost and sometimes below it. So you don’t have to be Einstein to realise why most DRAM producers have eased production or even discontinued these products. So what does the future hold? Typically, when the memory market enters all-out panic mode, everyone starts purchasing. DRAM manufacturers start listening. They see that the price is more attractive and they react accordingly, but not overnight. It will take time for the market to reach equilibrium. It's not yet known how likely the installed base of machines that use EDO and FPM modules will be to upgrade, or how much risk is involved in diverting production to make a fast buck on an unknown demand. Does anybody have the inclination to fill this sudden demand? The answer is almost definitely yes -- but this time, there are many indicators to show that the take up will be slow. I believe the Taiwanese manufacturers have taken well to this area of the market. They may find an unexpected niche, and this will help them in time and turn them into market leaders for this type of product. So what does the end user do in the mean time? Like all price hikes, you have to believe that sudden 30 per cent increases in the price of products is not normal, especially products traded world-wide on a massive scale, as DRAM is. There is definitely some speculation and profiteering going on. I don’t believe that anybody, anywhere has millions of EDO and FPM DRAM sitting on their shelves just waiting for the right time to release them onto the market, so I can only deduce that the price will remain high, not at today’s levels but the sub-$2 16Mb EDO or FPM DRAM is a thing of the past. Until next time... ®

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