Low inventories are lifting spot market prices of DDR2 memory chips to their highest level in more than nine months. In the past week alone, prices of 533 MHz and 667 MHz 512 Mb chips climbed by more than 10% to $5.92 and $5.97, according to analysis firm DRAMExchange.

The solid pace as well as a supply chain DRAM inventory of only 1.92 weeks prompted Isuppli to upgrade its estimate of near-term conditions for suppliers to a "positive" rating. According to the market research firm, DRAM is currently at its leanest inventory levels since January 2005. While the strong demand for DRAM modules has been supported back-to-school sales and "record low prices for PC microprocessors," Isuppli analyst Nam Kim said that he does not see any "near term supply shortages" in the segment.

According to Kim, consumers aren't affected by higher DRAM prices when buying a new PC: Low storage and CPU prices are currently leveling out the higher cost for memory. However, as system builders brace for the Christmas season and the arrival of Windows Vista in January of next year, there could be a different scenario next year: "We expect the 2007 market to be similar to 2006. If storage and CPU prices go back to normal, the cost will definitely will become an issue and we will see higher pressure," Kim said.

Source : Tom's Hardware US