interesting reading about DRAM price hike:
anandtech.com
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Memory: Rising prices, RDRAM on the way, and a new toy
Date: September 13, 1999
Type: Memory
Author: Anand Lal Shimpi
Review Index: SelectIndexMore on the "Shortage Theory"RDRAM - 800MHz of crap?A "kinda" new toy
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The biggest question on everyone's mind (ok, maybe no the biggest but it is definitely an important one) is "what is up with the sharp increase in RAM prices?" Although I don't have a single "it's his fault" finger pointing answer for you all, I do have quite a few sources that I managed to talk to and quite a bit of information that they provided me with. There are potentially a number of causes of this DRAM price hike we've been forced to endure and what I'd like to touch on are a few of the most likely (although not necessarily true *cough* disclaimer *cough*) reasons you have to pay over twice as much for a 128MB DIMM now than you did just a few weeks ago.
I mentioned in a front page update a while ago that most vendors and distributors I talked to pointed their fingers at one company in particular as the cause of the memory price hikes, and no, it's not Intel (they've caused other things, leave them alone this time, they didn't do anything ;)...) That company seems to be Micron, now I'm not pointing any fingers nor am I making any accusations, I'm only passing on the information that I've received from more than one generally reliable source. It seems as if Micron's semi-recent acquisition of Texas Instruments has made Micron quite the player in the US market, let's take a look at a little quote about the acquisition made back in June '98:
"This strategic acquisition will enhance Micron's position as the most cost-effective memory producer in the world, by leveraging our leading-edge technology into existing fabs without significantly increasing R&D, administrative and operating costs," said Steve Appleton, chairman, CEO and president of Micron. "The additional global capabilities, including participation in a unique joint-venture manufacturing strategy, positions Micron to take advantage of future markets."
It seemed innocent enough at the time, however there has been quite a bit of finger pointing recently. Many say that due to Micron/TI's strong presence in the US, with no reason to competitively price DRAM products due to pressure from Taiwanese/Korean makers (which would be courtesy of the tariffs placed on Taiwanese chip manufacturers), they have been simply letting the prices go up mainly because they have no reason to remain competitively priced - aka the classic monopoly theory in action. Now keep in mind, that if this is the case, it is only contributing to a portion (if any part at all) of the recent hikes. So, what else could be causing them?
With the transition to RDRAM (Rambus DRAM) being pushed for by Intel (ok, you can blame them for that, but really, they didn't do anything wrong this time) in time for their September 27th release of the Camino chipset - which will support SDRAM - memory manufacturers are currently trying to juggle more than a few balls here. Just look at what the industry is asking them to do: produce PC66 modules (seemingly not that great of a demand, but there are still PC66 compliant systems out there guys), produce PC100 modules, produce PC133 modules (just in case RDRAM fails miserably), and now produce RDRAM. That's a lot of balls they're being asked to juggle, and frankly, it makes perfect sense for them to have trouble cranking out four different flavors of memory.
A shortage of regular SDRAM modules due to the pressure for a shift to RDRAM is another possibility for such a drastic price hike, however on the other side of the issue we have the OEMs and distributors that actually sell the stuff. They are claiming the opposite, in that quite a few OEMs and distributors don't understand the price hike at all, stating that there couldn't possibly be a shortage as they are currently sitting on more than enough DRAM parts just waiting to be sold. While this doesn't apply to everyone, it could very well be a contributing factor to the rocketing prices.
Going along with the shortage theory, is the theory that the move to smaller than 0.25 micron fabrication processes (0.22 micron, 0.18 micron) is leaving a number of chips unfit for sale. This is a highly likely theory as venturing below the 0.25 micron mark is uncharted territory, even Intel has yet to prove whether or not they can produce high enough yields on their 0.18 micron Coppermine processors to make the switch profitable. How does this affect 0.25 micron parts that aren't going to be made using the new fab processes? Well, to upgrade the fab plants you naturally have to close down the fab, and what does that contribute to? A chip shortage.
And we have yet another possibility, this is a report I haven't heard too much about however one vendor is stating that they've been told of some very large OEM purchases (*cough* Dell/Compaq *cough* first they [Compaq] take our Athlons, now they take our memory) of memory thus removing the modules we all want from the hands they need to be in (ours of course). Most of these items of speculation seem to point at the same conclusion, a shortage, is that the case? I don't think anyone but the manufacturers themselves can offer an answer to that question, but just for your own information, I've managed to put together a quick graph of the price of a 128MB SDRAM module (PC100) from August 3, 1999 up to September 8, 1999 below from a particular vendor.
Not too appealing at all is it? So the big question is, what do you do if you are in the market for memory today? The best thing to do is to wait, the memory prices will go back down, it is only a matter of time.
Some of the most extreme reports indicate that the chips alone for a 128MB memory module are going for around $14 a piece (8x8 chips), multiply that number by 16 (the number of chips on a 128MB SDRAM module) and you get the cost of the 128MB of memory on a stick of SDRAM, this is not including the cost of the PCB nor the manufacturing costs either. Surprising, isn't it?
Stay away from memory right now, it is not a good time to buy, but I'm sure you are already well aware of that. After the initial batches of RDRAM begin making their way into the hands of the vendors/distributors from the manufacturers, we should see some order restored to the SDRAM market. Memory manufacturers currently in quite a bit of a bind in terms of what they can do right now, Intel is pressuring them to produce RDRAM, while the rest of the industry wants PC133 compliant SDRAM. What is a company to do?
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