TAIPEI, TAIWAN: Last week (Nov/26-Dec/3), DDR2 512Mb eTT spot price dropped 1.2 percent to US$0.80; DDR2 1Gb eTT closed at US$1.61, down by 1.8 percent; DDR2 1Gb price slipped to US$1.96, down by 2.41 percent.

It should be noted that the DDR2 512Mb eTT price had once fell below the US$0.80 level to US$0.77, but soon returned above the US$0.80. DRAMeXchange foresees that the DDR2 512Mb eTT chip price will be flat or slightly trend upwards.

Amid the persisting DRAM spot prices declines, signs of a price rebound has finally appeared. The following is a chart compiled by DRAMeXchange in showing the occurrences of drastic DRAM price declines.

1998  SDRAM 16Mb     8" wafer factory expanded too excessive, causing the supply significantly exceeding the demand
2001  SDRAM 128Mb   911 event and bubble economy, resulting in the demand to drop rapidly
2007  DD2     512Mb    Vista effect isn't as hot as expected, demand of DRAM grows milder,  and too much production output from 12" wafer fab causes.

DRAM price to drop continuously
According to DRAMeXchange, the price drop can be attributed to many reasons. Nevertheless, a probable price rebound may occur as the DRAM prices slip below variable costs. This comes in the wake of manufacturers adjusting their production plans based on the changing market conditions.

For example, the DRAM price dropped to  US$0.8 in 1998 Q2, and then surged back to the US$2.0 level during the next quarter. For Nov01, it dropped to US$0.8, but eventually rebounded back to average of US$2.42. Based on these two events, it can be seen that the price changes were spurred by major international DRAM makers scaling back on their production volume in an attempt to bring the market demand and supply to a more balanced state.

Beginning from 2006, DDR2 price has already dropped from  US$7.0 to US$0.77. However, it has returned to US$0.82 level.  By looking at the current market dynamics, market observers believe it has already reached variable cost level, prompting major DRAM manufacturers to reduce their production volume in spurring prices to to rise in the not-too-distant future. If prices do indeed begin climb upwards, a strong price rebound may be seen.