Earlier this year, it was predicted that DRAM prices would rise, but, as most who buy on the spot market know, DRAM prices usually dip back down in the late February- early March time frame.

Not so this year. Unfortunately for the buyers, it is now predicted that DRAM prices will come back with a vengeance, rising as much as 40% over this calendar year.

While the DRAM market is moving from DDR2 to DDR3, and I had written about the large memory manufacturers pushing DDR2 on resellers, it isn’t working out the way it should have. No quality DDR2 is being blown out right now, as prices are within 10-15% of DDR3.

A story from ITWire, a magazine from the land down under, shows that the problem will be world wide, DRAM is going up, so the time to buy is now –

As the world economy picks up and a slew of new gadgets come onto the scene, industry soothsayers are predicting a strong upswing in DRAM sales.

According to iSuppli, the Electronics value chain analysts, increased shipments and increased selling prices led to sales of $8.5 billion in the fourth quarter of 2009.  This was the first time sales topped $8 billion since Q1 2007.

iSuppli’s preliminary forecast suggests that “DRAM revenues will rise to $31.9 billion in 2010, up a whopping 40.4 percent from $22.7 billion in 2009. This follows declines of 3.7 percent in 2009, 25.1 percent in 2008 and 7.5 percent in 2007.”

“This year will build on the momentum built up in the fourth quarter of 2009, when overall industry revenue increased by 40 percent sequentially,” said Mike Howard, senior analyst for DRAM at iSuppli.

“Increased bit shipments combined with higher Average Selling Prices (ASPs) were the main factors driving the robust growth. ASPs climbed by 16 percent and bit shipments rose by 21 percent. The result was revenue of $8.5 billion in revenue in the fourth quarter.

“iSuppli believes that the DRAM market’s strong performance in the fourth quarter will not presage a downturn, such as what occurred when the Internet bubble burst in 2001,” Howard said.

“However, conditions in 2010 are radically different from 2001 when the Internet bubble burst and capital spending explosion resulted in unsustainable growth. Instead, iSuppli foresees a period where the DRAM industry will see solid revenue and steady profits as DRAM suppliers have done a good job managing manufacturing capacity.”

As Howard suggests, the industry is attempting to better manage inventory to ensure that over-production doesn’t lead to price plunges, as have happened in the past, but keeping a lid on discounting is only part of the reason for the increased revenue.

The other is the rapidly increased demand for new gadgets.

The huge variety of new smartphones, each of which needing more and more memory; along with the push for a second portable computer (be it a netbook, iPad or something different) has meant that there is a rising demand for DRAM.

Even better is the need to load up the supply-chain with inventory of these new devices before a single one goes on sale!

The iSupply report offers a chart suggesting strong growth for 2010, followed by a slowing over the next three years.  Their reasoning for the decline is not explained.

While the pricing going up is good for the market, and will assure no supply problems, it would have been nice to get the usual dip after the holidays. Now it looks like no drop in prices can be contemplated until after the 4th quarter holiday season.

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