Corporate demand drives up DRAM prices

PC vendors are bulk-buying DDR SDRAM to beat anticipated price rises in the near future, market watcher iSuppli reports.

It's a typical supply and demand issue, the researcher says. Indications are that big business is once again buying new PCs. DRAM supplies are tight but within the levels required by PC manufacturers. However, rising corporate demand is going to stretch DRAM supply, which in turn will push up prices. The PC makers are simply buying now to take advantage of today's low prices before demand outpaces supply and prices go up.

Is the corporate spending increase enough to sustain the price rise? iSuppli acknowledges that growth is still small compared to PC replacement cycles of the past. However, businesscustomers are buying machines with much higher memory capacities than is usually the case - again, taking advantage of today's low prices to eliminate the need for more costly upgrades a little way down the line. iSuppli believes corporate PC buying will accelerate in the second half of the year.

Currently PC OEMs pay $32-34 for a 256MB DDR DIMM. iSuppli expects the price to rise in the last half of March and again in the first half of April, with prices nudging past $40. That represents a $17.6 per cent increase, which is a lot when you're equipping a PC with 1GB of memory.

Contract DRAM prices - what big PC manufacturers pay - are typically measured over half-month periods. The spot market is seeing price rises too, said iSuppli, as some buyers try to stockpile DRAM ahead of the price curve. Limited supply may hinder their efforts, and that too drives up prices. ®