DRAM contract prices are rising, but analysts warn against complacency, saying prices are being driven by deals that may never come to fruition.
Industry and analysts agree that prices hit bottom in November. Then spot prices for 128Mbit chips stood at $1, down from $15 a year before. Prices rose to $2 in December and to around $3.30 now, due to falling inventory levels, slowing production and increasing demand.
But Andrew Norwood, an analyst at Dataquest, told EETimes that industry should be wary of assuming the trend will continue: "Psychologically, the power has moved from the buyers to the sellers. People are anticipating the shift but, in fact, nothing has changed. If the Hynix/Micron merger falls apart, prices could go down again."
Robert Lea, an analyst at Beeson Gregory, was equally downbeat: "There are still fundamental structural problems in the industry that need addressing. DRAM is still being produced at a loss. Things are still pretty dire."
Infineon Technologies' AGM saw the admission that it is still producing DRAM with negative gross margin, despite price increases and first quarter results which showed an 18% sequential sales increase for memory products.
One of the reasons Norwood gave for slowing production was that yields have fallen as makers move to smaller process geometries. "Many fabs are currently in transition between 0.17 and 0.15µm or 0.15 and 0.13µm technologies," he said. "But companies will get their yield back pretty quickly."