What is going on, and how is it likely to play out? The prices in the chart represent the lowest spot market prices reported by market tracker InSpectrum for the past year. These prices typically remain below contract prices as long as there is an oversupply, and stay above contract prices during a shortage.
According to InSpectrum’s figures, today’s lowest spot market DRAM prices are about double their lowest point, and rose above contract prices in January. This is about two quarters earlier than Objective Analysis expected, so The Memory Guy is wary that this might be a short-lived phenomenon, with the real DRAM shortage beginning early in the second half of this year.
For DRAM makers, though, I certainly hope that this trend has staying power, since the last two downturns have been very trying for the industry. The consolidation that Objective Analysis predicted is playing out, and the PC market’s softness, should it remain in place, can only accelerate the need for further consolidation. Add to that the likelihood that NAND will undermine the PC DRAM market and you have a pretty bleak long-term outlook for DRAM manufacturers!