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With Sale Price Below Cost, RAM Manufacturers Mull Production Cuts

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News Posted: Thu, Jul 14 2011 8:07 PM
The tendency of DRAM to become cheaper over time is generally considered a good thing—at least, in the consumer market—but evidence suggests prices may have fallen a bit too much. Current manufacturing costs using 40nm technology is about US $1.50 while the selling price for a 2Gb part is currently $1.17 - $1.31. This is less a problem for the top-tier RAM manufacturers who are using 30nm tech, but there's no way for smaller players to quickly migrate to the updated process.

Selling parts below the cost of manufacture is obviously unsustainable over the long term, a fact that has left the DRAM companies contemplating production cuts. Such cuts aren't made lightly; companies have typically negotiated price rates based on purchase volume, have committed to meet certain production targets, and incur certain fixed costs regardless of how much (or how little) product is actually made. As a result, it's potentially cheaper to grit one's teeth through a rough patch rather than make the sorts of changes that slow the product lines.


When we talk about DRAM ICs, we're talking about the individual chips on each stick of RAM, as shown above.

Manufacturers may also be jittery over the impact of a move on the worldwide IT economy. At present, many analysts are cautiously optimistic that demand will tick upwards in the second half of this year; a sharp increase in spot prices (as might be caused by a production cut) could jepoardize that trend. The United States' budget crisis is another potentially huge factor--if the US doesn't resolve the problem and raise the debt ceiling (regardless of how the agreement is reached), economists fear the impact on the world economy could be worse than the fiscal crisis of 2008.

Anyone who needs some memory, however, is in luck. NewEgg lists 8GB kits of DDR3 (that's 2x4GB) starting at $52 for DDR3-1066. DDR3-1333 is currently selling for the same price with DDR3-1600 starting at $64. DDR3-1866 lists at $84.99, with DDR3-2133 at $99. Considering the amount of RAM in question (8GB, in all cases), the cost/GHz ratio from 1066 - 2133 is almost perfectly flat. RAM rated twice as fast as DDR3-1066 is less than twice as expensive.

This doesn't mean DDR3-2133 is a better buy than DDR3-1066--in fact, the performance improvement from faster RAM is small enough that spending money in pursuit of higher memory bandwidth is virtually always a poor choice. Llano's recent launch makes the APU a rare exception to this rule--provided you intend to use the chip's integrated GPU. Nevertheless, if you're one of the rare users who can make use of the bandwidth, high-end RAM is a remarkably good deal.

Those of you who want to squeeze an advantage out of current low prices are advised to try for high-density single-sided DIMMs as opposed to large arrays of double-sided memory. Most CPUs have trouble running a high number of memory banks at high speeds--keeping the number of banks down is important if you want to push speeds upwards, and investing in such RAM now could make sense given historic low prices and the fact that DDR3 will be a constant over the next several generations of Intel and AMD CPUs. 
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OSunday replied on Fri, Jul 15 2011 2:11 PM

Wow this is really interesting, but why is the production cost so cheap, and aside from price why would manaufacturers stick with the 40nm technology over the newer 30nm, isn't there some sort of performance gain or some advantage in the 30nm chips?

Either way, im researching on newegg right now to go up from 8gb to 16gb of RAM

However when it says "Most CPUs have trouble running a high number of memory banks at high speeds--keeping the number of banks down is important if you want to push speeds upwards" does that mean it would be faster to say have, 2 DIM slots with 8gb sticks, than 4 DIM slots with 4GB sticks??

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Joel H replied on Sat, Jul 16 2011 7:28 PM

Moving from one process to another is expensive and time consuming. It's less a question of 8wanting* to stick with 40nm as it is having the money to move to 30nm.

So, ok. You need to understand what affects a memory controller. There are three concerns:

1) Total number of memory banks. A single-sided stick of RAM has fewer banks than a double-sided stick of RAM.

2) Number of slots in use. If you want to run at high frequencies, fewer is better.

3) RAM frequency. If you want to run tons of RAM, expect to be frequency limited. A memory controller that can handle 4GB of DDR3-2133 may only be able to run 8GB of RAM at DDR3-1333 and 16GB at DDR3-1066.

The best way to keep a system stable at high RAM loads is to use as few slots as possible and single-sided RAM.

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realneil replied on Sat, Jul 16 2011 8:17 PM

Let's hope that they can get their costs into some sort of control. I'm liking these low RAM prices right now, and I'd hate to see them go belly-up anytime soon.

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rrplay replied on Sun, Jul 17 2011 1:53 PM

I am really liking the new lower priced stick and have been considering a mem upgrade this weekend .noticed that some of the prices I had previously had on a 'wish list' at the egg are bit less as well .so now may be the time

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Schmich replied on Mon, Jul 18 2011 11:43 AM

Lower than production cost is pretty sad :/ Best of luck to them!

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BMC replied on Wed, Jul 20 2011 12:40 PM

I'm new to this so this is probably a stupid question, but if they can make a 2GB chip for $1.50, is $52 for 8GB of DRAM not a rip off? I would have thought the chips were the most expensive components? or is it $1.50 for older types and DRR3 etc are just much more expensive?

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realneil replied on Wed, Jul 20 2011 1:10 PM

BMC:
I'm new to this so this is probably a stupid question, but if they can make a 2GB chip for $1.50, is $52 for 8GB of DRAM not a rip off? I would have thought the chips were the most expensive components? or is it $1.50 for older types and DRR3 etc are just much more expensive?

Good question.

I would think that the costs of manufacturing the memory stick (after you have the parts) would have to be considered, plus the testing and programming the Intel XMP profile into them. Shipping and distribution costs probably play into the final figures too.

I know that there is stiff competition between these companies, and prices have never been this good for DDR3 RAM before. I like it like this, and would hate to see them go back up again.

 

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BMC replied on Sat, Jul 23 2011 8:16 PM

Thanks for that Neil, ye very true, they're so good at the minute I think its time I treated myself to an upgrade!

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realneil replied on Sat, Jul 23 2011 8:49 PM

BMC:
I think its time I treated myself to an upgrade!

Yes, I don't know how much lower prices will go, but current prices seem to be quite the deal as far as I can see.

 

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