RAM Prices Continue Rising -- Here's Why

By Published July 26, 2014 at 8:00 am
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RAM prices are on the rise again. If you've watched the market prices on RAM -- either through our weekend sales round ups or just through shopping in general -- you'd have noticed the price of an 8GB 1600MHz kit has nearly tripled. Around the end of 2012 through the first few months of 2013, the price of our example kit was in the mid $30-40 range; since that golden period, the price has raised pretty steadily toward the current resting spot. Prices had a major peak around the end of last year after supplier Hynix's factor fire, but February saw prices settle at what appeared to be a fairly steady $70-80 range.

It seems that this is no longer the case.

Starting around June of this year, prices began climbing once again. The current price appears to be in the mid $80-90 range and is poised to climb even higher. DDR3 hasn't changed much -- why is the price so volatile? To adequately answer this, let's recap RAM's position in the PC world and talk about how it's made.

How RAM is Made - SMT Lines for SSDs, RAM, Boards

RAM doesn't sit in the same position as some of the more interesting components. It remains more stagnant -- stable, developed, tested. There haven't been any game-changing advancements to consumer memory since DDR3 hit the mainstream in 2007. We're not saying it hasn't improved, but besides channeling and improved yield of higher frequency modules, there hasn't been anything to justify a complete revamp of technology. Higher quality fabrication, smaller process, and miniaturization (to mobile) have raised the standard; in fact, new overclocking records are still being set regularly. Still, the technology remains roughly the same as its 2007 origins.

Due to RAM's steadfast nature, it's the most readily compared to a commodity. Just like most commodities, it is influenced by a number of factors that are outside of the control of the technology itself -- bound more by incidentals. An official at Kingston recently supplied an example of the bigger picture for the industry:

"There are a variety of factors contributing to the overall trend of price increases in memory.  First, we are in a chip shortage situation.  The number of semiconductor companies producing DRAM has shrunken to three major players (Hynix, Micron/Elpida and Samsung). Some of these [suppliers] have switched their focus to produce more NAND Flash and mobile DRAM (e.g., eMMC and multi-chip packing) as demand has exploded for mobile phones and tablets.

DRAM is also in a transitional period as it switches to 25nm wafers and the move to smaller dies always takes time. When all three of these events are put together, it is the perfect storm for increasing memory prices."

Let's delve deeper into this and speculate on what it means.

Supply and demand dictate price more than anything else in a consumer market. If there is over-production, the market drops and prices go too low for the companies to make any money. As we are in an underproduction time, the price goes up. Pretty straight-forward. This forces us to look at why RAM is being under-produced.

There's more money to be made in NAND Flash and Mobile DRAM than desktop memory right now. With fewer semiconductor fabricators producing desktop DRAM, there's more chance of manufacturers and suppliers falling behind demand. I'm not saying that the companies are shorting the market in order to focus on bigger profit from a different field... but everyone follows the money. Bigger profit is what business is all about, and fewer competitors makes it easier to hold onto the customers.

The switch to 25nm wafers means stability, testing, and potential tooling changes; primarily, though, the transition sees a brief "stutter" in production as manufacturers shift to the new process.

If any one these scenarios were to happen, we'd see price fluctuate a little bit -- but with all three scenarios happening at the same time, it just continually worsens the price problem.

I can't say how high DRAM prices will go -- and hopefully they won't go too much higher -- but it is a possibility to see $90-100+ for our 1600 and 1866MHz kits as supply is likely to continue dwindling into Broadwell. If you're planning to purchase a new system or add some RAM, we strongly suggest keeping an eye out for the big sales on individual kits as Newegg, Amazon, and others equalize their inventory. 

- Scott "Abibiliboop" Griffin.

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