Need DRAM? The best prices are still to come

IDG News Service - Prices for the most popular type of computer memory chips have fallen by more than 40% since the start of the year, and users may get even better bargains if they wait until the middle of the year, observers said.
The plummeting price of dynamic RAM (DRAM) chips bodes well for consumers buying a new PC or looking to add a bit of speed to their aging computers. PC vendors often put a bare minimum of DRAM into new computer systems to keep costs down, but many software applications will perform better with more RAM available.
The ongoing price declines should also prompt DRAM makers to more aggressively promote the next generation of double data rate DRAM, dubbed DDR2, on which profit margins are greater. That could cause DDR2 to overtake DDR as the most widely used type of computer memory in the second half of the year, said Crystal Lee, DRAM industry analyst at ABN Amro in Taipei.
In March, DDR2 accounted for a fifth of all DRAM production, according to DRAMeXchange, an online clearinghouse for the chips.
Prices for both types of memory have been falling almost in tandem this year as a result of overproduction, but DDR2 retains a slight premium because it's new. DDR2 is gaining in popularity thanks to its faster speeds and lower power consumption, which saves battery life in portable systems.
The price of the current mainstream memory chip, 256Mbit DDR-400 DRAM running at 400 MHz, fell to $2.34 per chip early today, down from $4.04 at the beginning of the year, according to DRAMeXchange.
Prices could drop to $2 per chip in May, or even slip to $1.50 in a "worst-case scenario" for memory makers, Lee said. "Once that happens, the transition to DDR2 will move ahead," she said. Most producers start to lose money on the chips at around the $2 to $2.50 level, so they would look to DDR2 for better profits.
Memory chip prices aren't expected to increase again until later this year, if they increase this year at all, observers said.
The falling prices will likely cause two major changes in mainstream DRAM technology this year: a transition to DDR2 from DDR and a move to 512Mbit chips from 256Mbit chips, said Joyce Yang, a manager at DRAMeXchange. The company expects 512Mbit DDR2 running at 533 MHz to become the next mainstream chip -- beating out the 400-MHz version of the same chip -- because the 533-MHz chip runs faster with the front side bus used in newer