DRAM Makers to Cut Production Until Prices Rebound

Posted 09/06/2011 at 8:43am | by Paul Lilly

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You'd probably have a better shot at turning a profit selling ice cubes to Eskimos than churning out DRAM chips at today's prices. That's less of an exaggeration than you might think, and to cope with continually falling prices, some DRAM makers have decided to scale back operations until chip prices bounce back up.

Citing a Chinese-language report in the Economic Daily News (EDN), news and rumor site DigiTimes says Nanya Technology is gearing up to reduce DRAM output by 10 percent this month. In doing so, Nanya will allocate a larger chunk of its capacity to building higher price memory products, such as the ones that end up in servers and mobile gadgets, including smartphones and tablets.

Nanya isn't alone in this thinking. DigiTimes says Elpida Memory, Powerchip Technology, and Rexchip Electronics will also cut production, though it's unclear by how much.

The move might not sit well with consumers, who have been splurging on RAM at rock bottom prices, but it shouldn't come as a surprise to Maximum PC readers. Back in July, we reported that DRAM makers had considered making this very move, though it hadn't moved past the thinking stage at that point. Then market research firm IHS iSuppli warned one week ago today that DRAM prices, despite being at an all time low, were on the verge of freefalling due to a "dramatic oversupply" and that "besieged DRAM suppliers" should expect a "turbulent second half."

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