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Computer memory chip prices decline as production rises

Computer-memory chip prices fell for a second day as companies such as Samsung Electronics Co pump out more chips than computer makers need, pushing the price further below the level at which some producers can make a profit.

The spot price of the benchmark 256Mb, 266MHz double-data-rate dynamic random-access memory chip fell 4 percent to US$2.87, the third time it has traded under US$3 a chip. The price is according to dramexchange.com, a Taiwan-based Web site which acts as a marketplace for chipmakers seeking to sell chips they haven't shipped under contract to large clients.

"Everyone will be bleeding if prices remain at this level," Jon Chong Hwa, an analyst at Daewoo Securities in Seoul, said.

Prices have fallen by two-thirds since the end of October amid a glut created by chipmakers boosting output at new plants that make chips more efficiently. Made in their millions every month, chip prices tend to rise in the second half of the year as PC makers get ready for peak sales during the end-of-year holidays. Prices usually fall in the first quarter.

Most memory-chip makers report net losses when the benchmark price falls to less than about US$4. At less than US$3, some have to consume cash to stay in production, analysts said.
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