Look for more price volatility for double data rate (DDR) DRAMs in the next month.

Spot market prices for DDR increased from January to early April. For example, the average price of a 256 megabit (Mb) 32x8 400 DDR DRAM increased from about $4.20 in January to $6.80 in early April. Since then the price has dropped to about $5.80 as manufacturers increased production, according to Converge, an independent distributor.

Meanwhile, synchronous DRAM (SDRAM) prices remain stable. SDRAM increased in the second half of 2003 as third quarter demand kicked into high gear. For instance, the price of a 256 Mb 32x8 PC133 synchronous DRAM increased from about $4.00 in August to $6.00 in December. The price has been mostly steady since then.

DRAM manufacturers had cut back production of SDRAM in favor of DDR parts last year, but SDRAM demand outstripped supply resulting in higher tags. After prices increased, manufacturers increased some production of SDRAM and now demand is more in balance with SDRAM supply so tags are holding steady. How long that will last remains to be seen.

"We had expected to see continued upward pressure on DDR pricing, potentially pushing pricing for select manufacturers above the $7.00 mark," says Stephen Buckler, vice president of trade operations for independent distributor Fusion. "Pricing briefly flirted with this level, but the combined effect of OEMs withdrawing from the market and Hynix taking advantage of inflated prices by reportedly dumping five million 256meg DDR devices into the market through China had a chilling effect on pricing," he says. Other DRAM supplier-unloaded products resulted in continued price erosion.

He says DDR pricing will be "choppy" for a while with 32X8 devices fluctuating between the $5.10-$5.70 range and 16X16 configured products to sell in the $5.65-$6.00 range. SDRAM prices may be more stable because there are a limited number of SDRAM suppliers.

DRAM buyers should watch the rollout of DDRII DRAMs. "There is some question to the exact timing of the rollout as it is already 12-18 months behind," says Buckler. "Despite Intel's push of DDRII, the market is slow to adopt as there are some concerns."

He says the situation is similar to the one a few years go when Intel aggressively pushed Rambus. Leading computer companies made strong commitments to Rambus by securing supply. However, Intel delayed deliveries for its Camino chipset needed for Rambus DRAMS and that resulted in serious supply chain problems.

Memory test houses have been conservative in committing resources to DDRII, which potentially could lead to a supply gap.

Another problem for DRAM buyers could be flash memory if DRAM manufacturers decide to devote more capacity to flash.