Higher DRAM ASPs drive down PC DRAM content

Stamford, Conn. — With early April contract pricing up about 5 percent on the previous month for both DDR2 and DDR3 devices, the latest price increase has led some major PC vendors to cut content per box, reports Gartner Inc. The reason: The latest increase pushes the cost of 4 GB of DRAM to $90 or more and close to 15 percent of the bill of materials (BOM).

The only other time content-per-box was reduced as a result of increasing DRAM costs was in the first quarter of 2002 when pricing rose 129 percent quarter over quarter as the DRAM market came out of the recession, reports Gartner. At that time, average content was reduced by 10 percent for the quarter before returning to growth in the following quarter.

Content reductions is expected in both the consumer and professional markets although the desire to reduce costs will be felt more in the consumer market, said Gartner. Changes won’t happen overnight due to contracts with large retailers, which will have to be renewed with lower specifications, said Garner.

Gartner expects the lower content configurations will remain in place for at least one quarter. As a result, PC content growth will likely be 18 percent in 2010 instead of the current forecast of 30 percent, dropping the overall industry growth to 47 percent compared to the current forecast of 55 percent.

On the supply side, it doesn’t appear that reductions in PC content will change supply-and-demand dynamics in the industry this year but vendors will likely be more profitable due to higher pricing. How quickly DRAM vendors spend those profits on capacity will determine the outlook over the next few years, said analysts.

While spot pricing for DDR3 DRAMs edged up last week, DDR2 pricing was down slightly, according to Gartner. Average spot pricing across all densities and technologies was down 0.5 percent last week compared to the previous week, settling at $3.02 on a 1-Gb equivalent basis.


In the NAND market, spot prices remained virtually unchanged across most device types, with the exception of the 8-Gb MLC part, with average price increases of about 2.5 percent.


Gartner said demand for NAND memory remains relatively healthy as the industry enters the seasonally slower second quarter.