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Meltdown mauls memory market

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Memory makers have taken it on the chin during the ongoing Meltdown, but prices of DDR2 memory are now rising while some reports indicate that DDR3 prices are set to fall.

According to memory-market watcher DRAMeXchange, DDR2 prices - which have endured a long but steady slide for well over a year - are beginning to rise as output lessens.

According to DRAMeXchange, the benchmark price for 1Gb 128Mx8 eTT (Effectively Tested DRAM) chips rose today to as high as $1.02, an increase of "over 75 per cent from mid December to now."

This rise doesn't surprise Lawrence O'Connor, CEO of Mac-memory specialist Other World Computing and a 20-year veteran of memory-market fluctuations. "All the DRAM makers have been losing their shirts [on DDR2] for the last six to eight quarters - more so in the recent quarter," O'Connor told The Reg, "They've been selling for below actual chip cost for quite some time.

"Every five to seven years there's been a big dive in the memory-chip market, but this is the longest downturn in memory pricing that I've ever seen."

DRAMeXchange agrees, saying that "DRAM chip price has plunged since 2007 and suffered loss for almost seven consecutive quarters."

And that dive has left the DRAM industry in a turbulent state as a drop in demand has driven down both output and prices. According to DRAMeXchange, overly optimistic DRAM production caused a "severe oversupply" beginning in 2007.

That overproduction trend, however, has been reversed, with a 22 per cent worldwide production reduction from September 2008 to January 2009.

As a result, the price users pay for DDR2 memory will rise as the law of supply and demand works its market-leveling magic.

The news may be different for buyers of DDR3 memory, however. According to reports from Maximum PC and DailyTech, new production techniques and technologies from Samsung and Elpida will improve production efficiencies, power consumption, and speed of DDR3 memory.

As a result of these improvements, according to Maximum PC and DailyTech, DDR3 memory prices should drop as DDR2 prices rise.

O'Connor is less sanguine, saying "I would be surprised if DDR3 prices went down - and if so by much more - but I expect [DDR3 prices] to come into line with DDR2 this year."

No matter which direction prices trend, the memory market remains turbulent. Witness, for example, the rumored merger talks between Japan's Elpida and Taiwan memory-makers Powerchip Semiconductor and ProMOS Technologies.

It's going to be a while before the DRAM market regains a healthy equilibrium. ®

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