Good news for users: Flash, DRAM prices falling

IDG News Service - It's about that time of year again when users who need IT products with heavy memory chip content should stand by for bargains. Prices of the NAND flash memory chips used to store data in gadgets ranging from digital cameras to MP3 players, as well as DRAM (dynamic RAM), which store data temporarily and play a large role in the speed of a PC, are falling.

The main reason for the decline in prices is the time of year. The slowest time for IT product sales is normally between April and June, with some hangover as the summer drags on and people go on vacation. By mid-May or June, it will be a great time to pick up extra DRAM modules to help perk up a PC, or even look into digital music players. Often, when memory prices decline, companies that make MP3 players add more memory to new models and slash prices on older ones.

DRAM prices on the global spot market have dropped in the past two weeks to recent lows of around $4.58 per chip for the most widely used 512Mb version of DDR2 (double data rate 2), compared to $5.45 a month ago, according to information from researcher DRAMeXchange Technology Inc. As for NAND flash, prices for the most widely used 2Gb chips slid 33% in the first half of March.

"Moving ahead to [the second quarter], DRAMeXchange is still doubtful about any price rebound," it said in a report Monday.

Nam Hyung Kim, a memory industry analyst at iSuppli Corp., believes NAND prices declined due to weak demand for digital music players. Brisk holiday demand late last year gave way to a short period of shelf restocking by retailers early this year, but now demand has slowed.

The slowdown prompted iSuppli to lower its forecast yesterday for the global NAND flash memory market to $13.8 billion from $16 billion. Last year, the market was worth $10.8 billion.

There's other evidence for weak flash memory prices. Lexar Media Inc., a developer of NAND devices, updated its earnings forecast yesterday for the quarter ending March 31 to a level far below estimates. It didn't say why it revised its guidance, but analysts pointed to weak NAND flash demand.

Lexar Media's new numbers miss by a wide margin. The company expects revenue for the period of up to $130 million and a $30 million loss. That compared to analysts' estimates of $200 million in revenue and a $16 million loss.

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