Both AMD and Intel have fully embraced DDR3, and as a result, no one wants DDR2 anymore. Demand for DDR2 has fallen by the wayside, while DDR3 is selling through the roof. For Korea-based DRAM makers, the situation has left them with a surplus of DDR2 modules, and they don't want them any more than consumers do.
The solution? Bundle DDR3 modules with DDR2 chips. Doing so will help clear out DDR2 inventories that have been piling up, and will also help keep the price gap between the two standards from widening. According to DigiTimes' industry sources, the strategy is to minimize the impact that a DDR2 oversupply and DDR3 shortage would have on the market.
As it stands, sport market prices for 1.3GHz 1Gb DDR3 chips are averaging about $3.08, compared to $2.50 for 800MHz 1Gb DDR2 chips, according to the latest data from DRAMeXchange.
While perhaps not as resilient as the 3.5-inch floppy disk, DDR2 is doing its damnedest to avoid obsolescence. The only trouble with that is that memory chip makers aren't showing much interest in prolonging DDR2's relevance in the market place, not when faced with steep drops in contract quotes for DDR2 chips.
Just about every DRAM maker has shifted their capacity to the production of DDR3 chips, and in some cases (like with Powerchip Semiconductor Corporation), production is so lopsided that shares of DDR3 wafers have climbed above 70 percent. That's a big change from the third quarter of 2009, when PSC's DDR3 production sat somewhere between 0-5 percent of overall output.
But PSC isn't the only one. Both Nanya and Inotera Memories have also ramped up DDR3 output. And according to DRAMeXchange, Nanya is likely to see DDR3 consume 90 percent of the company's production.
Timing the purchase of RAM can be as maddening as trying to predict the stock market. It's entirely possible to plunk down a wad of cash on a memory kit, only to watch as prices plummet a week later. That said, if you're in need of a memory upgrade, now might be a good time to buy.
Or at least that's the message we take away from market research firm DRAMeXchange, who warns that a DRAM shortage looms. The firm notes a lack of capital investment as the reason why, adding that there's already a shortage of some memory densities because of a recovery in the PC market. DRAMeXchange says some OEMs paid as much as $55 for 2GB DDR2 modules in the sport market.
The firm says that year-on-year PC shipment growth could climb to 13 percent in 2010, putting pressure on memory makers to keep up with demand.
The DRAM market slumped to a 15-year nadir last year. But it is now moving briskly on the road to recovery. According to DRAMeXchange, contract prices for 1Gb DDR2 and 1Gb DDR3 chips shot up by 15.7% and 10.9%, respectively, in the late part of October. Nanya Technology's vice president and spokesperson Pai Pei-Lin expects an encore from the DRAM market in November. He believes November will bring yet another double-digit rise in contract quotes for DRAM memory.
In a change of pace, DDR2 pricing has finally surpassed DDR3, at least on the contract side. According to DRAMeXchange, contract quotes for 2GB DDR2 modules jumped up to an average of $31.50 in the first half of October, a little above DDR3's $31 quote. In addition, 1Gb (gigabit, not gigabyte) DDR2 chips have settled at $1.78, slightly above DDR3 at $1.75.
In the spot market, DRAMeXchange notes that prices for 1Gb DDR2 surged by 5 percent in a single day on October 8, and average quotes for 1Gb DDR2 800MHz chips managed to top the $2 mark at $2.24.
What this all means going forward is anyone's guess in the unpredictable memory market. But it at least appears that DDR3 will become a better bang/buck investment on the consumer side than DDR2. Elpida has already announced plans to increase output of DDR3 chips from 20,000-30,000 up to around 75,000 wafers per month, and Samsung also said it would ramp up production.
Like that cold you can't seem to shake, DDR2 has been hanging onto the market place, even as new platforms make a push for DDR3. That all changes six months from now, as DDR3 finally becomes the mainstream memory, says Morgan Stanley analyst Frank Wang.
Samsung, Hynix, Elpida, and Micron have all started to reshuffle manufacturing to allocate more capacity to DDR3 output, and of course that means scaling down DDR2 parts. And for those who are unable to produce DDR3 chips, they will be forced to pack their bags and exit the market when DDR3 supplants DDR2, Wang said.
In the meantime, DDR2 pricing is poised to fall once again. However, Wang warned that chip suppliers shouldn't take this as a sign that DDR2 is here to stay and they need to be aware of DDR3's impending march into the mainstream.
The price suppliers pay for DDR2 RAM has been climbing slowly for some time. Now it may have finally crossed paths with DDR3 prices, says price tracker DRAMexchange. The cost of a 1Gb 800Mhz chip has risen to $2, about the same as DDR3.As more platforms add support for DDR3, adoption has accelerated.
The increase in price had been accelerating in the last few weeks. It has gotten to the point that PC OEMs find supplies of DDR2 chips to be dwindling. When an OEM can get more advanced DDR3 for the same price, the market should switch over, according to analysts.This means you may be seeing a lot more DDR3 RAM in computers going forward.
We've been saying for months now that it's only a matter time before DRAM prices go back up and it will no longer be possible to pick up a high capacity kit with just the loose change in your pants pocket. That time hasn't quite come yet, but according to data by DRAMeXchange, prices for 1Gb DDR2 and 1Gb DDR3 are steadily increasing.
As it currently stands, 1Gb of DDR2 runs $1.53 while a Gb of DDR3 costs $1.66. That doesn't sound like much (and it isn't), but those prices represent increases of 8.5 percent for DDR2 and 5.1 percent for DDR3.
Meanwhile, contract prices for 2GB DDR2 and 2GB DDR3 sticks have shot up $27.50 and $29.50, respectively, in just the first half of September, and we still have the rest of the month to go.
Once again, if you've been eying a memory upgrade, you may want to bite the bullet rather than continue to play Russian Roulette with market prices.
In most cases, it's still cheaper to purchase DDR2 DIMMs than it is to invest in DDR3 memory, albeit not by very much in some cases. Citing un-named market sources, news and rumor site DigiTimes says the price gap between the two types of RAM is expected to disappear completely very soon.
As it currently stands, spot pricing for 1Gb DDR2 chips has climbed above $1.60, still lower than 1Gb DDR3 pricing, which has settled in at $1.90 and isn't moving very much. But market sources say the two segments will crossover, and do so at a price point below $2 per 1Gb chip.
If the price difference does go by the wayside, memory makers are likely to shift their focus to DDR3, where demand will be higher. This would also trickle down to PC vendors, some of which have been using DDR2 parts to cut back on costs.
The schism between DDR3 and DDR2 spot prices is widening. According to market research firm inSpectrum, although memory module and graphics card vendors made a lot of inquiries for DDR3 during the last week (July 13-17), transaction volumes remained low due to limited stocks. The market’s bullishness helped the price of DDR3 to continue its upward trends while price of DDR2 continued to fall with cussed consistency, with the price of 1GB effectively tested (eTT) chips even dropping below $1.