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DRAM contract prices fall over 10% from July

The contract prices of dynamic random access memory (DRAM) chips fell over 10 percent in August on a month-on-month basis, the biggest margin of decline this year, reported market research firm DRAMeXchange yesterday.

DRAMeXchange attributed the price decline to slow demand for personal computers, whose shipments this year may decline 2.5 percent from 2011, the firm said. As inventories at PC contract manufacturers have hit eight to 12 weeks, procurement in August was all but stagnant, DRAMeXchange said.

Weakened demand for PCs have resulted in a price decline for DRAM chips during the second half of August, with the DDR3 4GB module sold for US$18, a decline of 4 percent compared to the first half of August. The lowest transaction stood at US$17.5, a decline of over 5 percent.

For August, contract prices fell over 10 percent from July, the biggest margin of decline thus far this year, the firm said.

According to DRAMeXchange, the price decline came at a faster-than-expected pace and may be troubling news for second-tier DRAM manufacturers, for whom prices may have fallen below the cost of manufacturing. These firms are faced with but a few choices, such as reducing capacity, changing business models or withdrawing from the market altogether, it said.

Among memory chip-makers, Powerchip Technology Corp. posted a loss from its DRAM business, although the company's contract chip manufacturing unit was profitable, making chips for Renesas, an Apple supplier. Powerchip had second quarter net loss of NT$3.038 billion.

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