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After chipmaker's collapse, memory prices rise

Memory chip prices shot up on Monday--a welcome bit of news for beleaguered chipmakers. But it took the failure of a large German chipmaker to make this happen.

Memory chip prices shot up on Monday--a welcome bit of news for beleaguered chipmakers, who have been caught in a relentless downward price spiral.

Prices for DRAM (Dynamic Random Access Memory), the main memory in PCs, shot up as much as 26 percent, according to data posted on DRAMeXchange. A number of reports have attributed this to the bankruptcy of Germany-based chipmaker Qimonda, and seem to indicate that this will relieve some of the pressure on prices caused by oversupply.

The price of certain DDR2 (Double Data Rate, second generation) memory chips rose as much as 28 percent Monday. Flash memory also rose, with 16-gigabit chips rising more than 5 percent.

DRAM chip traders in Asia were returning from a week-long Lunar New Year holiday in China and Taiwan.

"I think it's just the first chance for the markets to respond to the demise of Qimonda," said Avi Cohen, managing partner at Avian Securities, which tracks the memory chip market. He also attributed the price rise to "recent commentary from Samsung and others of expected slightly higher DRAM contract pricing."

Last month, Qimonda, which held about a 10 percent DRAM market share in the third quarter of 2008, became the first major memory chipmaker to file for bankruptcy as a result of the decline in memory chip prices and worldwide credit crunch. Economic officials with the German state of Saxony said that talks about finding investors for Qimonda were ongoing but the outcome was uncertain, according to a Reuters report Monday.

Market researcher iSuppli forecast in December that DRAM revenue would drop 19.8 percent in 2008. Among the world's top 10 memory chip suppliers, the largest declines in revenue, according to iSuppli, will be seen by Qimonda, with a plunge of 40.7 percent; Hynix, with a 29.1 percent drop; Taiwan's Nanya Technology Corp., with another 29.1 percent decrease; and Powerchip Semiconductor, also of Taiwan, with a 23.4 percent reduction.