The price of 16Mb EDO memory modules is continuing to slump as grey market suppliers distort the market. And evasion of value added tax on the products could be behind the surplus.
The price of a a 16Mb Simm has dropped from $64 six or seven weeks ago to $45 duty-paid out of Hong Kong, but distributors allege that dumping in Europe by a large US memory manufacturer of memory has weakened the pricing generally.
Andrew Mackenzie, a director at Datrontech, said: "There?s been a huge amount of great marketing activity in the last three months."
The activity could represent a huge VAT scam through the European Union, according to Alan Stanley, managing director of French memory distributor Dane-Elec.
He said: "We can buy for less than the manufacturers charge but we don?t, because we believe VAT has been avoided." He said the difference in the prices could be as much as 10 per cent. He added: "There?s not a large volume of 16Mb EDO product in the market and the industry is in slight decline."
Sukh Rayat, general manager of distributor Flashpoint, said his company had decided to switch its model away from memory because of the problem. "Grey market activity has been going on for quite a while and we?re not sure whether that?s a part of our business we can rely on. There?s so much product we can?t make margins on it. I?m unsure of the reason but suspect VAT frauds could be the problem."
Mackenzie predicted that official supplies of 16Mb EDO were likely to dry up in three months? time while Stanley said he believed that prices were still falling because old stock was being sold on from one European country to another.
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