DRAM contract prices continues to fall another 10% in early March. Industry watchers generally attribute the fall as a sign of declining demand among PC OEMs.

DRAMeXchange noted that the slump in DRAM contract prices reached almost 30% from mid February through March. The company said the earlier-than-expected price decline signifies lower-than-expected demand from PC OEMs. Industry sources said that PC OEMs have already piled up sufficient inventory.

The latest DDR2 contract price shows that the previous price correction has now made the contract price for the same specification DDR2 chip lower than the spot price. According to DRAMeXchange's March 7 quotes, the price for a 512Mbit DDR2-667 chip went as high as US$4.20, versus the US$3.87 contract quote for the same specification chip in the first half of March.

The narrowing price gap between the two markets signifies eroding profitability for DRAM makers. DRAMeXchange noted that the production cost of a 512MB DDR2-667 unbuffered DIMM is around US$25-32 but the latest contract quote for such a module is US$33.50. The memory-trading firm warned that DRAM makers are exposed to potential losses if contract prices continue to fall.

By: DocMemory
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