Spot shortages in DRAM to drive Q3 silicon prices higher

Analyst firm iSuppli has claimed average global pricing for commodity electronic components will rise by 2.3 per cent in the third quarter compared to the second quarter due to shortages, with resulting price hikes, particularly for memory chips.

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

“Overall component pricing is being heavily impacted by price hikes for DRAM, spurred by a shortage of DDR3 parts,” explained Eric Pratt, vice president for pricing and competitive analysis at iSuppli. “Overall DRAM pricing is expected to rise by 10.2 per cent in the third quarter.”

Even with its depressed pricing, DRAM accounted for 9.1 per cent of global semiconductor revenue in 2008. Other areas seeing price increases include analogue integrated circuits, discretes and filters.

Pricing will decrease moderately during the third quarter for most major memory segments, according to the analyst. NAND-type flash will experience a 0.3 per cent decline. NOR pricing will decrease by 1.1 per cent. EEPROMs pricing will remain flat.

Declines also are expected for standard logic ICs, crystals, oscillators, connectors, resistors and magnetics. An overall decline is expected for capacitors.

“iSuppli previously expected price decreases would be of a greater magnitude in the third quarter as commodity component suppliers cut tags to capitalise 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.”

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