SAN JOSE, Calif. -- Upset with rising DRAM prices, many PC OEMs are reducing the memory content for select products, according to an analyst with Gartner Inc.
For some time, there has been shortages of DRAMs, causing prices to increase for both DDR2 and DDR3. Now, PC OEMs have reached the boiling point amid the price hikes.
''With early April contract pricing up about 5 percent on the previous month for both DDR2 and DDR3 devices, this latest price increase has led some major PC vendors to cut content per box,'' said Andrew Norwood, an analyst with Gartner, in a report.
Last week, average spot pricing across all DRAM densities and technologies was down 0.5 percent
compared with the previous week, standing at $3.02 on a 1-Gb equivalent basis, according to Gartner.
''PC vendors have been complaining about the price increase and the growing bill of materials (BOM) cost of DRAM for some time, but they have been reluctant to change configurations for competitive as well as contractual reasons,'' he said. ''The latest increase pushing the cost of 4GB of DRAM to $90 or more and close to 15 percent of the BOM was the final straw.''
Some but not all PCs are impacted. ''The effect of the PC vendors moving to cut content is hard to quantify, because it is not as simple as 4GB machines moving to 3GB and 3GB moving to 2GB,'' he said.
''First, the reductions will be different for the consumer sector versus the professional market. The professional is more of a 'pull' model, whereby the buyers configure the machines, while the consumer is a 'push' model, whereby the vendors build the PCs and put them on the stores shelves (currently the market is split almost 50/50 between professional and home or consumer),'' he said.
''The PC vendors' desire to reduce costs will be felt most in the consumer space, as this is where they have the most control, but these changes will not show up overnight,'' he said. ''A major portion of the market is driven by contracts with the large retailers, and these contracts will have to be renewed with lower specification before the content can be reduced. But
once they are reduced, the lower content configurations will stay in place for a quarter at
The supply of DRAMs and NAND flash memories is tight right now and OEMs could find themselves on the outside looking in for parts.
Not long ago, chip makers could not buy an order amid the terrible downturn. Now, amid the upturn, there are widespread reports of component shortages in the supply chain, including analog, NAND and DRAM.
''Based on recent checks throughout the supply chain we have found that DRAM remains tight throughout the industry. PC and server demand are driving prices higher,'' said Daniel Amir, an analyst at Lazard Capital Markets, in a report. ''We expect 2Q to continue to see positive DRAM demand. We believe that DDR 3 pricing will be up 5-10 percent in April.''