The world's dynamic random access memory (DRAM) chip sector is expected to be depressed through the third quarter, a situation worsened by suppliers' moves to increase production.

"The pace of price erosion is accelerating in August, a phenomenon that is expected to continue throughout the third quarter as suppliers boost their shipments," wrote Nam Hyung Kim, a principal analyst with iSuppli Corp.

Pricing for 256-megabit double data rate (DDR) SDRAM dropped by 5 percent last week, the report said, as prices for 256-megabit DDR fell to less than US$4 on the Asian spot market.

Contract prices for original equipment manufacture also declined by 3 percent to 5 percent for the first half of this month, according to the report.

The downturn of DRAM prices was no surprise as prices had remained at high levels until the end of second quarter, mainly due to production shifted by top suppliers from DRAM to other parts, including flash memory and logic chips, in the second quarter, Nam said.

The price pressure will shroud the sector throughout the current quarter as suppliers increase their deliveries, he said, noting that Micron Technology Inc indicated in its recent investor conference that it would boost its DRAM shipments by double-digit growth in the current quarter.

Hynix Semiconductor Inc is also trying to improve its 0.11-micron production in a bid to keep the world's No.2 position in the DRAM sector, Nam said.

Dramexchange.com said last week that spot prices of the most widely used memory chip may rise in the coming week on demand from makers of notebook computers and European customers.

Demand for notebook computers and motherboards will be "strong," the exchange said, with demand from Europe probably rising early next month.

Spot DRAM prices have fallen 38 percent from this year's high on April 12 amid concern about the absence of seasonal increases ahead of US back-to-school sales.

By: DocMemory
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