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WHY are RAM prices dropping?

Last response: in Memory
July 31, 2001 7:50:03 PM

Here in Canada RAM prices are dropping very quickly. $10 CAN a week... 256 MB of CL2 PC133 SDRAM = $79 CAN = $56 US.

I've noticed this trend has been happening since late last year and to my knowledge this kind of huge price drop has not happened before, is there a reason for such a speedy drop in price?

Duron 700
Windows ME
GeForce 2 MX
15 GB HD
128 MB RAM

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July 31, 2001 9:57:22 PM

I've got some personal theories regarding the dropping prices:

1 - declining demand in high fixed cost non diferenciated industry (RAM sticks are rather similar) - price competition to recover some of those fixed costs;

2 - High competition and excess capacity (also see 1))

3 - Dumping excess SDRAM stock - in a few months nobody will be buying those for new systems... (this explains low SDRAM prices)

4 - Sacrificing margins in order to destroy any RDRAM chance of sucess (low DDRAM prices, as the real costs are near SDRAM level and below RDRAM minimum level) makes industry avoid a skimming strategy in DDRAM

5 - Lower manufacturing costs with higher capacities (a 256 MB module doesn't cost twice as much as a 128MB module)

IS any of the above true?; all of them?.... maybe...
but the order is not by accident

How terrible is wisdom when it brings no profit to the wise
July 31, 2001 10:00:51 PM

I don't think your point about SDRAM is entirely correct. In fact Intel just gave RDRAM a kick in the head by saying that it's new motherboards and processors will rely on SDRAM rather than RDRAM.

Duron 700
Windows ME
GeForce 2 MX
15 GB HD
128 MB RAM
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July 31, 2001 10:20:59 PM

Simply because RDRAM prices makes quite difficult for Intel to sell their processors in the "value" segment - a quite large one - where RDRAM support would be moot. And it *seems* (a vile rumour indeeed :wink: ) that Intel has signed contract stoping them from using any other high bandwith memory technology except RDRAM in their chipsets until 2002. Therefore is no so much as Intel promoting SDRAM, but not promoting DDRAM.

Not that SDRAM will disapear from night to day, but in a year (and remember that to build and equip a RAM factory it takes some time) SDRAM sales will be dropping. And after that they will fall sharply (and companies want to do some equipment depreciation until then).

How terrible is wisdom when it brings no profit to the wise
July 31, 2001 10:24:19 PM

This is my source:

Intel Gives Rambus Cold Shoulder
Analysts expect the new chipset will become the basis for most P4 systems sold. With later versions supporting DDR.

"I think that Intel is slowly but surely backing away" from RDRAM, said Kevin Krewell, senior analyst with Instat/MDR (formerly MicroDesign Resources). "When they do finally introduce the DDR version of the 845, they'll get good performance--not as good as RDRAM...but everybody, overall, will be happier."

Last November Intel offered PC manufacturers a rebate of $70 for each PC manufactured with a P4 and RDRAM. It then lowered that rebate to $60 in the first quarter of 2001 and extended the program into the second quarter, when it was to be phased out because of falling RDRAM prices.

reported by ZDnet

Duron 700
Windows ME
GeForce 2 MX
15 GB HD
128 MB RAM
July 31, 2001 11:02:29 PM

I was not disputing that Intel is not very satisfied with Rambus :smile: . They probably would rather be supporting DDRAM over RDRAM - the question is that they cannot do so without incurring in major penalty (according to a baseless rumour :wink: ).

Therefore, for the time being, they support SDRAM for those not willing to part with a significant amout of greenies...

It is said that the diferences between SDRAM and DDRAM versions of i845 will be minute - technically intel could produce a DDRAM chipset at the same time. But it won't...

Anyway SDRAM is (technically) dead. And Intel knows that.

How terrible is wisdom when it brings no profit to the wise
a b } Memory
August 1, 2001 10:33:51 AM

Most of these ideas are related to the industry specifically and I'm sure are true, but there is also outside influence going on.

Essentially, during the last few years worldwide economic boom, particularly in the hight tech sector, the demand for PC's and related items such as memory chips, sky rocketed. The memory producers ramped up production to keep pace with demand and to try and stay one step ahead of demand even, so that prices didn't get too out of hand. However when the tech bubble burst and poeple have just stopped buying computer related items (the general consumer that is rather than the system builders who read these forums). The memory manufacturers found themselves producing more chips than were really wanted, thus flooding the market and prices started to come down.

They are now locked into a deadly gamne of chicken. What with there being only a handful of manufacturers, but enough to make competition fierce, they are each watching each other. What they want, and need, to do is to reduce production back to reasonable, affordable, levels to reduce the numbers of chips on the market and ths increase prices, but if any one company does this on their own, they will face a different situation. By reducing production of their chips, they will thus increase the prices of their chips, but if none of the other companies do the same people will stop buying the higher priced chips, but buy he lower priced chips (most don't care about brand loyalty or quality, like we do here), and therefore the company in question will lose out even more. Therefore none of the companies are prepared to make the first step, and this will go on till either 1: they get together a make a formal joint agreement (seems unlikely in the current climate) or 2: the companies start to go bankrupt and out of business til only one or two are left.

What with the world heading into (or already in if you believe some reports) a world wide recession, I somehow suspect the latter will be the case, and so we will have cheaper memory prices to come. but i believe that we are approaching end-game and once this happens, I also believe that the memory prices will skyrocket back up for the remaning company to recoup their losses and regain some stability. This last part is pure conjecture on my part and may not come to pass, so don't rely on it.

If you want to know more about how prices of PC componants may be affected by world economies, the ndo some searching around the web, you may find lots of interest....

That ends the Jeremiah, doom and gloom report :-)

Topher Bear

Don't wait for tomorrow! Live for Today! :-)
August 1, 2001 11:08:23 AM

And BTW, this has happened once before (to my knowledge) - I *think* it was in 1992. And once we had a price spike (RAM prices increased five fold in one month - 1988?).

How terrible is wisdom when it brings no profit to the wise