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DRAM drama as vendors predict another price hike

Will they or won't they get it up before Xmas?

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Lock up your DRAM, because memory prices are going through the roof again.

That's according to Taiwanese vendors who, unsurprisingly, all agree that DRAM prices will rise by the end of the year. Winbond Electronics has put forward a conservative estimate of $7.2 for 64Mb DRAM chips by the end of 2000. By contrast, "hopeful officials" at Micron Semiconductor yesterday suggested to Taiwan's Commercial Times that prices could top $20.

Meanwhile, a Winbond exec indicated that supply of 64Mb DRAMs would probably fall 20 per cent short of demand this year, and fare worse in 2001. Both Winbond and Vanguard International Semiconductor (VIS) are trying to upgrade to 0.18-micron manufacturing technologies from 0.2-micron to make 64Mb DRAMs cutting the volume of DRAMs they can produce. "Manufacturers need to go down to 0.18, but they are ramping production at the expense of the other (technology).

But this is a backward step to move forward," said Richard Gordon, a senior analyst at Dataquest. Gordon, who predicts serious shortages by August/September this year, thinks the predicted 20 per cent shortfall "extremely severe". "This would be at the high end of expectations, but there will certainly be significant shortages," he said. He added that the $20 estimate by Micron is a tad optimistic, with IDC predicting prices will more likely settle somewhere in the $10 range by December.

However, the ball is still in the vendors' court. "We will see a fairly significant price hike in the second half of the year. But it could go anywhere. What defines it is what price the vendors can extract. They will hike it up until the OEMs say enough is enough," said Gordon. A source within the industry, who asked not to be named, added: "The traditional attitude of Taiwanese manufacturers is to talk the market up. But there is no real reason why prices should be going up."

Today saw UK-based memory distributor Dane-Elec quoting unit chip prices of $6.25, and $52 for 64MB 8x8 DIMM. Prices were relatively stable compared with last week, the company said, but added it expected chip prices to rise to $7 by the end of the month. ®

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