Savvy DRAM buyers didn't panic this week when the spot market price of mainstream PC memory chips doubled in five days. In a show of restraint, procurement teams resisted the temptation to place crash orders to guard against a possible price escalation, and sure enough, DRAM spot tags started back down by week's end.
The short-lived spike was a quixotic episode that had everyone from suppliers to analysts perplexed as to why the spot market shot up so suddenly, briefly surging as much as 33% above OEM contract pricing.
The event was perhaps most apparent in the workhorse 16Mbit x 8, 128Mbit PC133 SDRAM, which doubled in less than a week from 85 cents to a high of $1.70, before falling off to $1.50 today.
"We haven't seen anything like this for a number of years," said Jan DuPreez, president of Infineon Semiconductor America, San Jose. DuPreez said Infineon made no changes to its "marketing behavior" that would have accounted for the price jump, and attributed the rise to an "imbalance in supply as [DRAM] producers transition from 0.18-micron to 0.15- and 0.14-micron processes," which typically have lower initial yields.
Whatever the reasons, the run-up failed to trigger a market stampede. Grant Johnson, an analyst at online component exchange Converge Inc., predicted that by the week of Nov. 19, "128Mbit SDRAM prices will be back to where they were at the beginningof the month. The only way a price increase is going to be sustained is when demand picks up."
While some configurations of 128Mbit SDRAM were affected this week, other versions used mostly in other applications saw little change. Spot prices for 32 x 4 128Mbit SDRAMs, popular in graphics applications, remained steady at $1.50 to $1.60, where they had been for a week or more. Meanwhile, 128Mbit DDR SDRAMs, which are only now starting to show up in the spot market, sold at a premium $2 level. And next-generation 256Mbit SDRAMs continue to be in tight supply as demand ramps quickly, and were listed on the spot market at $3.50 to $4.
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