DRAM market takes another dive

Chipmakers could see even more hard times ahead

Chipmakers are being warned that prices for DRAM chips may take a big drop in the coming months.

Research firm iSuppli said that the prices OEMs pay for DRAM may fall by as much as 10 per cent in August and September, putting the squeeze on a memory market that is still recovering from a massive slump in early 2008.

"The inventory level in the channel and among PC OEMs has increased compared to the second quarter," explained Nam Hyung Kim, iSuppli director and chief analyst.

"Global economic conditions are adding more uncertainty on the demand side of the equation.”

Kim said that in addition to the slowing economy and demand, chipmakers are contributing to the problem by manufacturing more chips than anticipated, forcing OEM prices even lower.

The research predicts that the latest slump could last into the early months of 2009. The downtown could also be worsened by an impending price war between top vendors Samsung and Hynix, who are looking to clear out their inventories as part of a move to new manufacturing processes.

Eventually, however, analysts predict that the industry will recover as chipmakers tighten their belts and the flow of chips from suppliers to OEMs begins to slow.