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DRAM prices set to rise

DRAM prices will increase 7.7% in Q3 2012

DRAM prices set to rise
DRAM prices will increase 7.7% in Q3.

The price of DRAM is set to rise as inventory levels are falling relative to demand. Lesser stockpiles show that DRAM is coming into better balance with demand stabilising pricing.

"The latest drop in the Inventory Index is due primarily to an aggressive stockpile burn-off from Japanese supplier Elpida Memory Inc., which declared bankruptcy in February," said Clifford Leimbach, analyst for memory demand forecasting at IHS. "The action taken by Elpida-and the resulting drop in overall inventory levels for the industry in the first quarter-is a one-time event unlikely to be repeated. Even so, the reduction in stockpiles in early 2012 means that pricing should continue to strengthen in the second half of the year."

The average pricing for DRAM is estimated to have risen 1.5% in Q2, and will climb further to 7.7% and 3.5% in Q3 and Q4 respectively. This is a stark difference to the declines DRAM prices saw in Q3 and Q4 2011, at 24% and a 12.4% decline.

There was an excess stockpile of inventory at two of the largest DRAM manufacturers, Micron and SK Hynix, at 8% and 15% respectively. However this is unlikely to affect pricing much, as there is a huge demand for PCs, Ultrabooks and Windows 8. These favourable conditions will allow these players to sell the inventory that they have built up.

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