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DRAM to drive up average commodity chip pricing, says iSuppli
Press release; Jessie Shen, DIGITIMES [Wednesday 5 August 2009]

Average global pricing for commodity electronic components is expected to rise by 2.3% sequentially in the third quarter of 2009, thanks to shortages and resulting price hikes for memory chips, according to iSuppli. With DRAM accounting for 9.1% of global semiconductor revenues in 2008, the price increase in this area is having an inordinate impact on overall component costs.

"Overall component pricing is being heavily impacted by price hikes for DRAM, spurred by a shortage of DDR3 parts," said Eric Pratt, vice president, pricing and competitive analysis, at iSuppli. "Overall DRAM pricing is expected to rise by 10.2% in the third quarter." Other areas seeing price increases include analog ICs, discretes and filters.

Following declines of 8.4% in fourth-quarter 2008, 9.2% in first-quarter 2009 and 5% in second-quarter 2009, overall prices are expected to undergo a short-term rise in the third quarter, iSuppli said. Most components actually are expected to experience price declines in the third quarter, but the average is being skewed by DRAM. However, the prices will revert to declines in the fourth quarter, with a moderate 0.2% decrease, iSuppli estimated.

Pricing will decrease moderately during the third quarter for most major memory segments, according to iSuppli. NAND flash will experience a 0.3% decline. NOR pricing will decrease by 1.1%, whereas EEPROM pricing will remain flat. Declines also are expected for standard logic ICs, crystals, oscillators, connectors, resistors and magnetics, said the research firm. Meanwhile, an overall decline is expected for capacitors.

Despite these decreases, the overall rise indicates pricing conditions are changing for commodity components, iSuppli said. "iSuppli previously expected price decreases would be of a greater magnitude in the third quarter as commodity component suppliers cut tags to capitalize on rising demand," Pratt said. "However, semiconductor suppliers have scaled back their capacity significantly during the downturn. This means supplies are somewhat tighter than expected, preventing prices from declining as much as expected."

iSuppli: Average sequential pricing trends for commodity electronic components, 3Q08-2Q10

Source: iSuppli, compiled by Digitimes, August 2009

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