The price of DRAM continues to soar for the second week in a row after a major DRAM manufacture files for bankruptcy.
DRAM prices continue to surge upwards after Qimonda, a major DRAM manufacture, filed for bankruptcy an hour before the Asian market closed on January 23, 2008. The price of 1Gb DDR2 667 MHz DRAM chips already increased 16-percent last week, with average prices for all DRAM capacities rising by as much as 8.7-percent during that time. The worst may yet still come however as prices are further increasing this week as brokers and traders in Taiwan and China return from a week long Lunar New Year holiday. China has the largest spot market for DRAM as it is where many of the world's PCs get assembled.
Despite the recent hike in DRAM prices though, market researcher IDC is expecting prices to begin trending downwards in the long-term as there is a large oversupply of DRAM in the market. Qimonda is still manufacturing DRAM, despite the bankruptcy, but even if it were to stop all production, there would still be more than enough DRAM in the market to meet all demand. The current global economic crisis has resulted in a decrease in the demand of consumer electronics, which puts pressure on DRAM makers.
As of Tuesday this week, DRAM prices were still trending upwards, but the market demands had stabilized. Even though this recent shock to the highly-sensitive DRAM market may soon pass, there may be more shocks soon to come. ProMOS Technologies is one such company that may soon be forced to follow the lead of Qimonda, as it is currently facing a $330M debt that it needs to payoff by the middle of February. The Taiwan-based company is appealing to the Taiwan government for funds as it cannot pay off the debt itself.