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By | Drew Cullen 27th September 2007 22:48

Hynix leaves DRAM market spotless

Falling prices causes memory loss

Hynix, the Korean computer memory maker, is fleeing the DRAM spot market - because prices are too low. That's not the spin the company is putting on the decision, telling Reuters that it wants to "enhance our flexibility and strengthen our position in the contract market".

This should make sense: according to market watcher DRAMeXchange, a component shortage in the contract market "is constraining the shipments of PC OEMs for the second half, where some manufacturers have even lowered their overall shipment targets". But shortages are expected to ease in October.

So why is Hynix leaving the spot market - it typically pumps out 15 per cent of its DRAM through this channel - at a time when shortages are on the cusp of becoming ex-shortages? Crazily, demand for DRAM is booming but prices are plummeting.

Typically, when demand is strong, spot market prices for computer memory are higher than official contract prices. And this is the busiest time of the year for PC makers - as they build out for the Christmas retail bonanza. This year, spot market demand is rising, but prices are hitting record lows, market watcher DRAMeXchange said today.

So it looks like Hynix simply wants to turn the tap off a little until prices start rising again.

PC builders like to play the spot market - and in the late nineties and early noughties many European PC OEMs made more money trading in DRAM and CPUs than in actually building PCs. VAT carousel fraud had nothing to do with that mini-boom, of course. ®

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