Samsung, Hyundai and LG Semicon will stop production of 16-megabit DRAM for up to eight days this month to try and end the slump in international spot pricing. The move is expected to ignite a DRAM price rise, although this is not expected to filter down to system prices.
DRAM is currently trading at below $7 a unit on international spot markets, down from a $10 peak in April. The big three Korean companies pulled-off a similar stunt at the end of January to try and pump-up a unit price of $6 at the end of 1996. A 25 per cent rise in DRAM pricing followed. The DRAM industry is expecting a similar, but slightly lower rise in August.
"It's fantastic," said Mark Leatham, sales and marketing director at Kingston Technology. "We will see some short increases in spot pricing, which is good as long as you are not buying it, although I am not convinced end users will be affected in any way. They haven't really benefited from the low DRAM prices this year because so many people were making-up the difference by putting a high margin on them."
Samsung, Hyundai and LG Semicon command a 40 per cent share of the worldwide DRAM market but suffered large dents in profits last year. However, they deny that the current weakness in pricing will impact on this year's profits forecasts. LG Semicon said that it can "absorb much of the impact from the weak spot prices," due to improved productivity.