DDR2 chip prices rebound
Keeping spotty head above US$1 water
The DRAM industry has seen DDR2 spot prices spike by 15-20 per cent in the past month, with eTT chips outpacing branded equivalents.
DRAMeXchange, the memory biz market watcher, said the rise in sales of non-branded chips (in both 512Mb and 1Gb densities) suggest either an excess of eTT chips flooding the market, or that eTT prices had simply outpaced the branded chips, as typically happens in "favourable pricing environments".
The rebound could also be attributed to brisk demand from industry players in the run-up to the Chinese New Year when trade typically slows down, according to Eddie Moore, PC components biz unit manager at trade distie Computer 2000.
DRAMeXchange thinks DDR2 512Mb prices should stabilise at around $1 in the first quarter. But if prices fall below $1, as happened before Christmas, DRAM makers will struggle to keep heads above water for more than a quarter, unless they adjust capacity and capital expenditure.
In other words, the ebb and flow of the biz seems to be performing fairly normally and within expectation for a traditionally slow time of year for PC sales.
DRAMeXchange said DRAM makers are confident that contract prices will rise at minimum two to three per cent in the second half of this month.
Press release here. ®
First of all, that's 512 megabits (Mb) not megabytes (MB). So to get 512MB you would need to put 8 512Mb on a stick ($8). Add the actual stick and soldering (~$1) and you end up with a stick price of ~$9. Packaging, postage (per stick), etc might add another $1 to the price.
So, $10 by the time it reaches the shop, $15 by the time you bought it... which doesn't mean $5 profit for the shop, just $5 INCOME, from which their own expenses have to come out of.
I am not a financial analyst, accountant or even shop clerk... but even I realise the factor price of a basic *component* should not be compared to the shop price of a finished *product*.
I would guess that's the price of the chip itself, and the added markup is the result of a snowball effect as it passes from hand to hand; first to a company that mounts the chip on a board and brands it, then to a distributor, then finally to a retail store. Add shipping/handling costs and a modest amount of profit to each movement of the chip, and 1500% total markup seems reasonable.
So if $1 per 512 stick is the going rate at the factory door.. why is it £7 ($15) in the shops?
That's a total mark-up of 1500%