By Michael Kanellos
Staff Writer, CNET News.com

The precipitous decline in memory prices appears to have skidded to a halt, leading some analysts to believe that some of the worst effects of the slowdown in the PC market may be over.

Memory prices have remained relatively stable for the past few weeks, said Eric Ross, an analyst with Thomas Weisel Partners. Inventories have also dropped. PC makers, memory manufacturers and distributors combined were sitting on approximately 20 weeks of inventory at the beginning of the year, he said. That figure is now down to around 10 weeks.

Although Ross and other analysts are extremely wary about the global economic situation and computer demand, the numbers indicate the PC market is at least stabilizing. The inventory glut is being digested, clearing the way for the sale of newer products. That's good news for companies like Micron Technologies and even the PC companies.

"I can't say that (memory prices) have hit the bottom today, but they are very close to the bottom," he said. "The PC (manufacturers) are starting to go back to the DRAM guys and place orders."

In a note titled "Light at the End of the Tunnel" issued Thursday, Merrill Lynch analyst Joe Osha wrote that commercial activity in the memory world remains thin. However, "It is important to note that (memory pricing) has not worsened," he wrote.

"While we take caution in calling a turnaround in this early stage, we expect the DRAM market to remain stable and note that supply conditions should only improve going forward," he added. Osha put memory inventories in the six- to 10-week range.

The remarkable aspect of memory prices right now is that they aren't changing. The average spot price, or daily price in memory exchanges, for 64-megabit SDRAM--one of the most common types of memory used in PCs--was $2.25 on Thursday, roughly the same price as the day before, according to Ross.

Spot prices for 128-megabit SDRAM, meanwhile, rose 3.1 percent from Wednesday, to $4.38. Contract prices, or the prices that large PC makers pay, are tracking the same trend.

In the recent past, the picture was less placid. In the first week of October, 64-megabit chips sold for $7.50. In December, the price was down to $3.80, while prices overall were dropping by about 5 percent a week. In February, the price dropped to $3, still higher than today's price.

Stabilization is the result of the inventory evaporation. Excess supplies in late 2000 lead to massive discounts. The problem was compounded in February when memory makers dumped inventories before the end of the Japanese fiscal year, said Ross. Memory companies typically try to spruce up their books by clearing out inventory. Micron, like the Asian manufacturers, also ends its fiscal year in February.

Not only are memory inventories drying up, PC inventories are shrinking as well, he said. It is a similar sentiment cautiously shared by some computer executives.

"We've seen some pickup in notebooks," Webb McKinney, vice president of Hewlett-Packard's personal computing organization, said last week in an interview.

Nonetheless, the outlook remains foggy. Demand will depend on improvement in the economies of Europe and other regions. Even if economic erosion halts, growth will remain limited. Everyone is also more skeptical of forecasts.

"We didn't do a very good job of predicting the slowdown," McKinney said. "The principal driver of the slowdown is the economy. It's not that people woke up one morning and decided they didn't want PCs."

Although prices have stabilized, it is probably still too early to bring out champagne. Hyundai appears to still be selling its memory below costs. Sixty-four-megabit chips cost Hyundai about $4 apiece to make. The company has been selling them for $2 to $2.50.

Micron, however, is in a better position because of lower manufacturing costs and a diverse product line.

"Pricing stability should mean improving share price performance," Osha wrote about Micron. The stock remains a "buy" at Merrill Lynch

Source: http://news.com.com/Take+2+for+PC+memory/2100-1004_3-5190234.html

DDR stands for double data rate, and it has become the standard PC memory over the past couple years. DDR now tops out at 400MHz; DDR2 will debut at 533MHz and climb to 667MHz before the end of the year. Higher speeds lead to greater data throughput, a key driver of PC performance.

DDR2 is also easy on energy. Statistics from Samsung project that DDR2 running at 533MHz uses 65 percent less power than 400MHz DDR does. While this will help conserve notebook batteries, it will also cut back on heat dissipation in desktops and servers, an increasing problem, as processor speeds climb.

The exact performance boost is difficult to quantify, "but suffice it to say that as DDR2 speeds increase from 533MHz to 800MHz, the performance difference (is) notable," said Richard Gordon, research vice president for emerging technologies and semiconductors at Gartner.

The ability to integrate DDR2 into computers will come after Intel and others release chipsets that can connect to it. Grantsdale and other early DDR2 chipsets will likely appear in May, with PCs that use the chips appearing later in the year.

"The server market is going to come up first, followed by the desktop, although one large customer is ramping up desktops before servers," Donabedian said.

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Demand has picked up in the last couple of days. On average, we have seen about a 5 percent increase thus far. At this time, we are not sure if this speculation or true market demand. Availability is OK.

What this means to you: The market could be trending upwards, so if you are looking to upgrade desktops and notebooks that take DDR memory in your enterprise, now is most likely a better time than it will be in the coming 3-6 weeks.

DDR2 is continually gaining ground as more motherboards are supporting it, and prices are still dropping. Demand for DDR2 has picked up tremendously.

What this means to you: If you are planning to upgrade newer servers that take DDR2 memory, now is a great time to buy.

If you are using VMWare or trying to get better performance, upgrade now! DDR2 demand and current low prices suggest that pricing could be rising soon.