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Memory: transitions and shortages

01 Jun 10

The memory (DRAM) market is much like the stock market. In fact, as with shares on the New Zealand Stock Exchange, DRAM also has its own DRAM exchange. There are many variables which can dramatically force DRAM pricing, and this is precisely what we saw at the end of the fourth quarter of 2009 and the first of 2010.
The recent shortages of DDR3 technology were propelled by 64-bit applications, OS, and adoption of virtualisation. This is becasue memory pricing increases if PC demand rises as PCs use more DRAM than any other device.
At the start of the first quarter, we saw the price of memory increase in excess of 40%. Simply put, this is the result of supply and demand – when the demand increases shortages occur so the price goes up.
Early to mid 2009 saw the DRAM market at its lowest price point in many years; the recession had hit and demand was down, so there was an abundance of product in the marketplace. The slow in demand forced the temporary closure of DRAM factories, and the demise of at least one major DRAM manufacturer.
Original equipment manufacturer (OEM) uptake on DDR3 escalated in the fourth quarter of 2009 and continued through the first quarter of 2010. The current shortages arose as factories were not ready for increases in demand, with production needing retooling to uptake DDR3 over DDR2 technology; this in turn has created shortages in DDR3 product.
Predictions are that the demand for memory will continue throughout 2010 as businesses are continually looking for ways to increase server efficiency; processor, I/O and memory are three of the most important subsystems in a server. All are critical to the performance and reliability of a server and the amount of system memory available significantly affects overall system performance.
DRAM vendors are continuing to predict major shortages and pricing increases throughout 2010 if current aggregate demand surpasses the current aggregate supply.