Prices remain weak for most electronic components, although the large-scale price declines from last year are clearly over.

Many buyers are concerned about the lack of capital investment by component manufacturers and fear a severe shortage of parts next year once the high-tech sector starts firing on all cylinders.

Buyers often mention DRAM and flash memory as parts they expect to be in short supply. Electronics purchasers are right to be concerned about DRAMS because the supply base has consolidated over the last several years as DRAM prices and revenue plummeted.

Consider this: In 1995 the DRAM market totaled $40 billion; last year it shrank to about $11 billion. With that kind of revenue decline it's no wonder many chip companies got out of the DRAM business.

Besides fewer DRAM suppliers, shortages and higher prices for DRAM are likely for other reasons. DRAM is starting to be used in more equipment besides computers. Networking and consumer electronics equipment are using more DRAM. New cell phones with Internet browsing capability will also use DRAM. New applications plus the rising memory content in PCs will mean greater DRAM demand in coming years.

In addition the DRAM market continues to become more fragmented. There are different DRAM architectures, organizations and densities. Suppliers need accurate forecasts so they can build the types of parts that are in most demand. However, if forecasts are not accurate, they may build too few of a certain type of DRAM, resulting in shortages and higher prices.