Chip prices spike on PC demand

SAN FRANCISCO: Computer memory chip prices jumped more than 10 percent amid growing demand for personal computers and concerns about supply, analysts said.

A surge in buying by PC makers, among other issues, has supported the price rise, said Nam Hyung Kim, an analyst with iSuppli Corp. Wall Street analysts, including Lehman Brothers' Ted Parmigiani, have made similar comments on the price rise.

All of this has pushed spot prices to nearly double what they were a year earlier. Prices in the spot market for a popular type of memory chip, 256-megabit double data-rate memory, jumped 10.8 percent to $6.30, according to DRAMeXchange, an online memory marketplace. A year ago, prices were $3.33, said Kim.

"There is some panicking in the spot market," Kim said. "Suppliers have a very tight supply."

On the supply side, memory chip makers are shifting some factory capacity to other types of chips, especially so-called "flash" memories for consumer electronics, Nam said. Also, some memory makers continue to have trouble producing chips using the most advanced production processes.

Shares of Micron Technology Inc., the Boise, Idaho-based producer of dynamic random access memory, or DRAM, rose 29 cents, or 1.64 percent on the New York Stock Exchange.

Meanwhile, Munich, Germany-based Infineon Technologies AG on Monday denied a report from a Taiwan-based Web site, DigiTimes, that it planned to cut its output of a type of memory chip, DDR DRAM, by 50 percent in April.

Infineon is shifting some of its production capacity away from DRAM, but such a drastic cut would be impossible in such a short time frame, said spokesman Christoph Liedtke.

He added that the company is able to produce more chips from its growing relationship with contract manufacturing partner Semiconductor Manufacturing International Corp., based in Shanghai.

"The 50 percent reduction in DDR supply is wrong," Liedtke said. "That's not possible."

Nonetheless, Infineon is pushing the limits of its factories' production capacity, he said, and is seeing a more than 10 percent rise in contracts to sell chips this month.

"We expect that prices will further increase in the second half of April," Liedtke said.

© Reuters