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Memory prices on the rise

Memory prices may be bottoming out, thanks both to increased demand by manufacturers gearing up for the holiday season and a declining chip inventory.

    Memory prices may be bottoming out, thanks both to increased demand by manufacturers gearing up for the holiday season and a declining chip inventory.

    A quick check of consumer prices doesn't conclusively show that consumers are seeing a dramatic rise in memory prices, but there are indications that they are beginning to increase.

    At First Source International, a large computer equipment reseller, one sales representative there said price sheets were changing three times a day to reflect increases. A 16MB parity RAM module (4x36) was $110 last week but is now $155, while 8MB of regular RAM is selling for $85, up from $50 a week ago.

    Several other large vendors, both wholesale and retail, have reported increases of 25 to 35 percent in memory module prices, and 16MB modules in particular are becoming hard to get in some areas.

    "Perhaps the DRAM market has bottomed out. That would go for 4 megabits and 16 megabits [the chips most commonly used in memory modules]," said Brian Matas, a senior analyst with ICE, a semiconductor market research and consulting firm.

    Two factors are contributing to the stabilizing of prices, according to analysts. Major manufacturers decided in June and July to cut production of memory chips, thereby cutting down bulging inventories. The second is the holiday selling season: DRAM is used in numerous consumer electronics items as well as PCs, and demand is increasing as manufacturers gear up for anticipated robust sales.

    However, countercurrents also exist. Any price increases people are seeing now might not last past the Christmas season because of excess production capacity, according to recent published reports.

    "We haven't had to raise prices yet, but the prices on components that the chips are made of have gone up," according to one sales representative at LA Trade, a major computer memory and storage device reseller. The representative said a 16MB 72-pin SIMM was priced at $120 last week but was now $124 this week, while their component cost has gone up $30.

    "Right now, we're keeping the margins lower" to keep consumer costs lower, she said. "We'll try to see if this is just a blip."

    At Insight Direct, numbers are also holding steady, with company representatives reporting that prices bottomed out a month ago and have remained stable since. An 8MB RAM module is selling for $79, and 16MB of parity RAM is selling for $149.

    But Matas said the market could still fall. "With increased demand, manufacturers will try to keep prices up," said, "but it takes just one player to get the market tumbling again."