Chip manufacturers are almost giving them away

These chips are so down, they're subterranean....

These chips are so down, they're subterranean....

Prices in the semiconductor market have sunk so low that, if a recent study is to be believed, memory chip firms are making a loss on each one they sell.

A recent Gartner Dataquest survey has revealed that prices in comparison to production costs are at their lowest point ever.

One of the most common chips in desktop machines, a SDRAM (Synchronous Dynamic Random Access Memory) chip, has fallen 92 per cent from $18.60 to around $1.50, since July 2000.

Sarah Clements, a spokesperson with memory reseller Offtek said their turnover has slowed, but sales have increased as prices remain attractive for the consumer.

Clements added: "Margins are being squeezed. The way the market is we're all under the kosh. If we continue to sell at cost, there will be casualties."