RAM prices dip, may slide further

SDRAM prices, which were at their peak last year, have slided
to their lowest in August 2001. A 64MB module was priced at Rs 425 (excluding
excise) in the third week of August 2001, compared to Rs 450 in the previous
week. In July, the same module was costing about Rs 475.

128 MB and 256 MB memory modules were down at Rs 775 and Rs
1,500 respectively, in comparison to Rs 850 and Rs 1,800 in July.

According to market observers, the price slide began few
months back after remaining steady for quite some time. The last peak level
reported this year was at around Rs 1,000 for 64 MB and Rs 1,700 for 128 MB.

Market sources claim that this is a normal phenomenon that
happens whenever a new technology comes in. According to them, people have
started buying Pentium-4 based machines, which support only RDRAM. This has
caused the sluggish demand for SDRAM. "SDRAMs are used in machines with
P-II and P-III while, people have become technology-conscious and prefer to buy
the latest," says a memory reseller.

RDRAM are expensive but considerably faster compared to SDRAM.
Today, an 128 MB RDRAM costs about Rs 4,600.

When RDRAM was first launched, its high cost, along with that
of Pentium-4, kept consumers away from buying it. Because of this Intel gave
subsidies to those PC makers who used RDRAM. The subsidies included a rebate for
PC makers and a Pentium-4/RDRAM bundle.

However, recently Intel has started phasing out this subsidy.
The slow demand for P-4 with RDRAM support has prompted it to release a new
chipset with SDRAM support. When this happens, analysts believe that SDRAM will
again gain demand.

It may be recalled that, when price of RAMs were at its peak
in September last year, an earthquake hit Taiwan to make things worse. Taiwan is
the major source for RAM imports in India. There are about 30 factories in
Taiwan manufacturing wafers for chips. Many chip manufacturing plants were
damaged in the earthquake. Some sources have even linked the downward price
trend to these plants which are back into full production.

Some observers also claim that the real reason for the drop
in SDRAM prices is because of an oversupply caused by poor sales of PCs over the
past few months.

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