It was not that long ago that I was commenting on an article in Maximum PC telling of the upcoming price reductions in RAM – not even a full month. Why was that being claimed? First, the supply was outstripping demand, and also certain factories were coming up with newer processes, delivering higher densities, and in greater numbers. Second, the PC sales were actually leveling off, and so the production would further outstrip demand.

Then, I looked further back into what I have commented upon, and in April there was a story about the lack of RAM because the suppliers had underestimated the need, so greater supply was possible, but not in production.

It is turning to be a process that looks like the ride of a cowboy on a bucking bronco, a constant up and down, with little level movement. This is a problem for many who don’t purchase RAM months in advance by contract. Those who purchase in small quantities without standing orders always pay higher prices, and the spot market is always eventful, but the up and down movements are bringing the peaks and valleys of the price graph  much closer together on the horizontal axis, with no normalization of things.

For the midrange buyers, it can be a scary proposition, as missing the perfect buy by a couple of days can be a change in price overall of thousands of dollars.

Tonight, in a late story from PC World, we see that iSuppli is warning of shortages once again, which will certainly bring the price of RAM up tomorrow – it’s almost like penny stocks!

A shortage of the main memory chips used in personal computers could send prices of the chips higher in the second half of this year, market researcher iSuppli warned on Monday.

DRAM makers face two supply problems currently, an inability to obtain needed production equipment and tricky work implementing advanced new technology, iSuppli noted.

A DRAM shortage would spell trouble for the global computer market. At a time when personal computer shipments are soaring – at a 22.4 percent year-on-year clip in the second quarter according to IDC – DRAM makers are still trying to recover from the downturn last year.

That last prediction I was writing about was delivered from an article that had not yet seen second quarter sales figures.

Many companies did not have enough money to buy new equipment last year, so they’ve inundated equipment vendors with orders this year. The key to success in DRAM is making as many chips as fast and as small as possible. New equipment is needed every year and workers face a learning curve to yield as many chips per silicon wafer as possible.

The threat to consumers is in the potential for PC prices to rise. Most DRAM go into PCs and servers. The chips are vital to storing data as it’s being used, which affects computer speed and operation. A problem with DRAM supplies could force PC prices higher because vendors would have to pay more for the chips.

And yet, if things pan out for us, as consumers (which I consider myself as one) in the later part of this year, the supply will once again outstrip demand, for those places bringing out smaller, denser memory will be at full throttle, working hard to deliver maximum output for the holiday season. This should drive prices down, yet, depending what type of memory you need, you might not benefit from lowered prices. If you happen to need slower, or less dense memory, you might need to buy now – yet the volatility is such that not even the best of prognosticators can say when the best time to buy will be.

Tight supplies of a number of PC components have already sent PC prices up for the first time in five years this year, according to Acer, one of the world’s biggest PC vendors. Higher DRAM prices have been one culprit of the rise in PC prices.

iSuppli did not forecast how high DRAM prices might go if the supply problems surface.

The main DRAM manufacturing tool chip makers lack right now is immersion lithography equipment, which iSuppli believes will be in short supply this year. Companies that make the vital equipment will not be able to produce enough machines to meet industry needs, the market researcher said, and only a few DRAM makers already have the gear they need.

The second trouble is in chip yields. DRAM makers constantly work to make chips smaller so they can yield more chips from each silicon wafer. The technology to get ahead in DRAM takes time to master and a number of companies have run into problems because the technology is more difficult to implement as it gets smaller. Currently, DRAM makers face problems using sub-50-nanometer technology, iSuppli said, naming only a few chip makers have successfully made the transition to the latest technology.

The three DRAM makers in the best position to benefit from rising chip prices are Samsung Electronics, Hynix Semiconductor and Micron Technology, iSuppli said, because they’ve already upgraded to the latest technology.

Samsung maintained its lead in DRAM during the second quarter with a 35.3 percent share of industry revenue, according to a preliminary report from Gartner published Sunday, followed by Hynix with 20.9 percent, Elpida Memory with 17.3 percent, Micron with 13.3 percent and Nanya Technology with 4.4 percent.

It’s going to be an interesting ride, but we can hope that, at the very least, we don’t see what anyone would call a shortage – remember, it’s not here just yet. If there is a declared shortage, prices will really climb, and the only ones who will benefit are the memory companies and the large buyers, who will have been guaranteed their price months ago.

If only memory were like diamonds…they may be expensive but their prices stay stable over time. Unfortunately, memory is more like gold, which can fluctuate madly up and down, on the whim of some unseen company like iSuppli.

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Personally, I don’t think there’s intelligent life on other planets. Why should other planets be any different from this one?

Bob Monkhouse


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