Memory modules to recover, but prices will stay low
By James Carbone -- Purchasing, 5/20/1999
The dram memory module market will grow 32% this year to $20 billion as memory requirements of systems increase. But falling prices for drams for the rest of the year will apply serious downward pressure on memory module tags.Sixty-four megabyte dual-in-line memory modules (dimms) are the most widely used in PCs, but PCs also will use more 128-megabyte modules this year, and 256-megabyte modules in 2001.
It's estimated that 85% of drams are used in modules either built by dram manufacturers or by module makers such as Kingston Technology and Camintonn, among others. The percentage of dram used in modules will likely grow to 90% by 2002. "There still are some consumer and communication applications that use discrete drams, but not a whole lot," says Sherry Garber, vice president at Semico Research. Some servers also use discrete chips that are placed directly on the board.
Pricing of modules reflect what is happening in the dram market, says Garber. While dram tags have fallen for the most part of the past three years, recent pricing has been volatile. Prices increased toward the end of 1998, but slid a bit in mid-March. The good news for buyers is that dram pricing is expected to fall 20%-25% for the year, which obviously will affect module pricing.
Paul Meyers, dram commodity manager at independent distributor American IC Exchange, says demand is strong for 64-megabyte 8mx64, PC-100 modules and the 128-megabyte 16mx64 PC-100 modules. "We are also seeing increased demand for 256-meg modules," says Meyer.
Meyers says module prices declined in March. "Many dram manufacturers are reducing the price of the chip in order to sell product and reduce inventory levels. The modules that are not eroding are the trailing edge and specific manufacturer original modules," he says.
Garber says the dram and module market will see a healthy recovery in 1999. She forecasts 50% growth in dram revenue this year and a 32% increase in the module market.
She also notes that the dram market has fallen hard over the past three years. Anytime there is a dramatic decline, there is usually a strong recovery. "There should be a good bounce back in the market this year," believes Garber. "A lot of people have gotten out of the market, and there should be shortages. The dram market, including modules, should see some good revenue."
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