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Micron sees price of memory on the rise

One of the world's leading memory makers confirms that prices are heading higher, at least for the short term, and adds that manufacturing capacity will remain tight through the end of the year.

    Micron Technology, one of the world's leading memory makers, confirmed today that prices are heading higher, at least for the short term, and added that manufacturing capacity will remain tight through the end of the year.

    Kipp Bedard, Micron's vice president of corporate affairs, said the company is no longer selling 64-megabit memory chips for less than $8.

    Until recently, such chips were selling far below $8. According to South Korean officials, for example, the average price for 64-megabit DRAM made there was $6.57 in April, up from $5.93 in March.

    "We just increased contract prices this week," Bedard said today in a question and answer session at the Robertson Stephens Semiconductor Conference in San Francisco.

    Memory prices are the proverbial canary in a coal mine for the PC industry. When manufacturers found themselves saddled with too much inventory and too much factory capacity between 1995 and 1998, memory sold at, and even below, cost. The sub-$1,000 PC was a byproduct of this era.

    Now, unanticipated demand for servers and consumer electronics is outstripping the ability of manufacturers to produce memory. Memory prices are rising, presaging an end to easy discounts. Memory makers are also returning to profitability.

    Bedard said his Boise, Idaho-based company is seeing some signs that PC makers are looking to boost inventories of memory chips in anticipation of limited supplies later this year. But industrywide, PC makers have only about a week to 10 days' worth of inventory, he said.

    Bedard said the only customers with significant inventory are those that have been buying Rambus memory. Bedard said that while customers initially were projecting that 10 percent to 15 percent of their shipments would include Rambus in the second half of the year, Micron now sees Rambus demand at about 1 percent of the market.

    "We are not producing much Rambus," Bedard said.

    For next year, Bedard said he sees about 5 to 10 percent of the memory market going to Rambus-based memory, with about 10 to 20 percent going to Double Data Rate (DDR) memory, an improvement on today's synchronous DRAM.