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Memory prices creep back up

Prices for computer memory chips are rebounding slightly.

Prices for computer memory chips are creeping back up as the industry makes adjustments to put the brakes on falling prices.

Prices of 16-megabit Dynamic RAM (DRAM) memory chips are rising again as major Korean memory manufacturers alter their pricing strategies. Contract pricing has risen between 10 and 20 percent over the last month, according to market research firm Dataquest.

In contract pricing, purchase prices are fixed for future delivery. Companies that manufacture add-on memory circuit boards, referred to as memory "modules," often write contracts of this kind when purchasing memory.

DRAM is the principal kind of memory used in almost all personal computers. Currently, 16-megabit DRAMs dominate the sector.

Although there are a number of reasons for the price rise, the principal cause is that "Korean DRAM producers have stopped chasing after the lowest-price orders," according to Jim Handy, a memory analyst at Dataquest. Moreover, Japan's largest business daily, the Nihon Keizai Shimbun, is reporting that prices for add-on memory for PCs rose in February.

Japanese chip makers "reached a basic agreement" with add-on memory vendors to raise prices on February shipments of 16-megabit DRAM chips between five and ten percent from the previous month, according to the newspaper report. The price hike comes as the memory chip supply has tightened, after manufacturers reined in production.

Memory module manufacturers supply much of the add-on memory. Memory modules are the small circuit boards which hold the memory chips. These modules are plugged into small slots in a PC when adding extra memory.

Dataquest's Handy noted, however, that memory prices traditionally drop about 30 percent a year and that they will continue a long-term decline. He also said that prices in 1997 should stabilize compared with the steep drops in 1996.