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Thoughts on the memory market shakeup, from the inside

Before I took over as the CEO of OCZ Technology, I got my start as a freelance writer.  Over the last few weeks, there’s been an influx of rampant speculation on DRAM pricing, but don’t be so quick to believe everything you hear.

As the DRAM spot market remained relatively soft since its recent collapse, we’ve seen the overall price on standard speed memory modules in the channel decrease -- which has in turn driven down the price of high performance memory modules. This is good news for the consumer, but with the increased activity of the market in the past two weeks and general consumer demand on the uptrend we could be in for a change. Let’s take a look at what’s been happening in the spot market.

Taiwan Based DRAM manufacturer Powerchip Semiconductor reduced its weekly output of chips and we have seen the price climb on these parts by over 25% in the past two weeks. Powerchip pricing for DDR2 667 MHz parts -- which are commonly used in standard speed grade memory modules -- is viewed by other manufacturers as a barometer for pricing and the often adjust their prices accordingly.

The great debate among modules houses these days is whether Powerchip is holding inventory,  swapping fab capacity to higher density parts or implementing previously scheduled new die shrinks. If there are indeed swapping capacity then in the short term we will see a continuation of price increases, which will soon be passed on to consumers.

As usual this is based on demand from consumers; if consumer demand switches to the higher density 2GB modules at its current pace, look for 4GB kits to go up short term and stabilize long term as supply ramps up. 

In terms of high performance memory, the story on the spot market is Micron may start swapping capacity away from 64x8 over to higher density 128x8 parts. If true what does this mean in the short term? You guessed it, increased prices on 1066 MHz DDR2 -- but conversely this will also decrease the price of 2GB modules when Micron gets its full capacity online.

Of course the question remains whether or not to buy now or buy later.  Traditionally any changes in the memory spot market affect retail pricing two to three weeks after the fact.  Coupled with the major Intel CPU price cuts coming next month, you can be sure demand for more memory in the channel will go up this July. And we all know what happens when demand goes up with low supply.

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By KristopherKubicki on 6/25/2007 12:03:14 PM , Rating: 3
Please give us feedback. If it's generally positive, we may host a semi-regular column from Ryan in our blogs section.

RE: Feedback
By Ratwar on 6/25/2007 12:30:28 PM , Rating: 2
I think basically any blog postings from industry CEOs adds a lot to the site, unless they're obviously bias or marketing statements, which Mr. Petersen seems to be avoiding.

RE: Feedback
By Chillin1248 on 6/25/2007 12:41:49 PM , Rating: 5
I agree with that statement.

Mr. Petersen has done a great job with this blog, all the while disaffecting himself from industry bias. I for one would look foward to more blogs from this CEO.


RE: Feedback
By gyranthir on 6/25/2007 12:49:33 PM , Rating: 2
I agree, Ryan seems to be very level headed about this. Probably was a gamer at some point and knows that sometimes us gamers need to know when the time is right, otherwise blow our budgets...

RE: Feedback
By Duraz0rz on 6/25/2007 1:13:25 PM , Rating: 2
I totally agree! They give us, the consumer, a perspective behind industry changes and innovations that are in the works. Plus heads-ups like this...I love it.

I also find it funny that, at the moment I posted this comment, there was a Crucial ad to the right haha.

RE: Feedback
By mm2587 on 6/25/2007 12:49:31 PM , Rating: 2
do you really think a well written column like this one is going to receive much negative feedback? A blog from the CEO of a major industry player is always welcome unless of course the article consists of "omgz buy XXXX beforz it 2 l8"

as to memory prices I'm a bit torn now. I was planning on building a new system after the july price drops, and have been ecstatic with the continuing downward spiral of dram prices. Now I wonder if I should go out and purchase ram for my new system now or risk waiting another month

RE: Feedback
By Verran on 6/25/2007 1:25:50 PM , Rating: 4
I'm certainly not going to scream "bias", but hopefully you can see the conflict of interests in a memory company CEO coming here and basically saying "Now is the time to buy memory."

I mean to be fair, Ryan speaks intelligently, explains his points fairly, and generally talks as if he has an understanding of the enthusiast market that frequents this site. But when the CEO of a company tells me that now is the time to buy said company's product, I have to wonder when (in his eyes) is it not time?

RE: Feedback
By Duraz0rz on 6/25/2007 2:16:34 PM , Rating: 2
I'm just thinking he's forewarning potential consumers that now is the right time to buy memory before prices soar in the end of July.

RE: Feedback
By Verran on 6/25/2007 2:36:25 PM , Rating: 2
Right, but my point is that he stands to gain considerably by telling people to buy memory, since he does indeed sell it. Especially since OCZ has a huge ad campaign with DT, meaning that driving general demand here will translate well to sales for his company.

I understand the point he's making, but I'm pointing out that there's more than a benevolent desire to inform the public here. His "information" translates directly to his bottom line.

True or not true, it seems like a fairly weak launch-point if your goal is truely to be an unbiased informer.

RE: Feedback
By TomZ on 6/25/2007 3:02:13 PM , Rating: 3
I'm just thinking he's forewarning potential consumers that now is the right time to buy memory before prices soar in the end of July.

With due respect to Ryan, I doubt that will happen. I don't think events in the July timeframe are going to cause any significant demand spike - it's not like there are tons of people waiting on the sidelines for the July tech updates before they buy. Most people make purchase decisions besed on larger, slower market factors, like new capabilities requiring new hardware (e.g., previous Internet and multimedia booms), or based on small or large-scale upgrade cycles (e.g., my computer died, have to buy a new one; or in the corporate world, replacing batches of machines that are 'n' years old).

I also think that producers will have some visibility to demand increases (e.g., slow demand increase due to Vista release) and will increase output accordingly to make sure they don't lose market share.

RE: Feedback
By TomZ on 6/25/2007 1:26:53 PM , Rating: 3
I enjoyed this blog post. The problem with certain other CEOs is they are so full of themselves, and I don't think the tech crowd here really wants to hear people tooting their own horns ("look how great I am"). Knowing a bit more about the memory market is kind of interesting.

RE: Feedback
By darkpaw on 6/25/2007 1:38:45 PM , Rating: 2
Its a great idea as long as there is more substanace then spin. This would be a perfect example of the type of article I think most people would like to see.

RE: Feedback
By oTAL on 6/25/2007 1:52:36 PM , Rating: 2
In a commodity market like memory, the market decides the prices and, lately, high supply and low demand made prices dip, which is good for consumers and not so good for manufacturers.

Throughout 2006, many opinion makers and techies may have told their cousins, aunts, friends, and strangers on the side walk, that memory was too expensive, that 1GB was enough for their low needs, and that they could easily buy a stick later and install it with little trouble. That kinda hurts business.

But if a CEO from a certain company were to go into a website read by the majority of the previously mentioned opinion makers and say that prices are about to rise, then maybe they would go to their families and say "You know what? Vista is out and 1GB is so 2004, go out and get a new memory stick this week while they are cheap." That could cause demand to go up.

The great thing about a prophecy like that is that noone would get hurt. People would go out and buy their cheap memory, thanking us for the good advice and thanking again after the prices go up. We would thank the afore mentioned CEO for his great advice. And best of all the memory makers would stop the damn sinking prices and make a buck in 2007, against all odds.

Then again, maybe I'm just being paranoid...

It was a good article anyway and I enjoyed the read. ;)
Keep them coming Ryan.

Best regards,

RE: Feedback
By oTAL on 6/25/2007 1:58:08 PM , Rating: 2
Wow!! From the comments I'm reading on this page... people thanking god for having bought memory or getting ready to do so....

I guess that if the crazy tin-foiled-hat previous poster were to be right, then the strategy would be working!


RE: Feedback
By One43637 on 6/25/2007 3:19:16 PM , Rating: 2
I agree with the others. I would like to see more entries from industry insiders as long as it's not a marketing spiel.

RE: Feedback
By OCZryan on 6/25/2007 6:12:20 PM , Rating: 3
hi guys ,

please keep in mind , I am not trying to make any forecasts on DRAM prices , as a few have pointed out , if consumer demand is poor , dram could drop if its good it could increase

The only issues I am specificaly concerned about (keep in mind I want ram to be cheap as then end users buy more and OCZ materials costs drop) is the potential shortage of microns , which OCZ sorts for 1066 and higher speed modules.

RE: Feedback
By ted61 on 6/26/2007 10:35:03 AM , Rating: 2
Great article. I was wondering what was going on in the world of memory lately. It seems like the prices are dropping daily. I thought that maybe a whole new technology was right around the corner.

These tech articles are always good. Raul's articles are usually very good to read too.

I say get as many experts to blog as you can. OCZryan did a nice job keeping it neutral.

Good thing...
By Aikouka on 6/25/2007 12:06:41 PM , Rating: 2
that I was planning to buy some RAM today! I guess I better jump at that deal on NewEgg (and coincidentally, it's for OCZ ram as well)!

Thanks for the heads up.

RE: Good thing...
By Flunk on 6/25/2007 1:04:40 PM , Rating: 5
I think it's good to have blog entries from prominent business leaders in the PC industry. I do however think that is is very important that they be flagged as such.

Maybe Dailytech can add a section for this sort of blog such as "Professional Insights" or "Industry Opinions". That way it will be obvious who is writeing the content as to not confuse readers.

yes, articles from industry sources are excellent
By johnsonx on 6/25/2007 3:54:40 PM , Rating: 3
Yes, articles from industry sources are excellent. Presumably such articles will be subject to some minimal scrutiny from DT's regular staff.

All I would suggest beyond that each blogger's industry position be identifed somewhere, perhaps at the end of each article such as:

"Ryan Petersen is the CEO of OCZ Technology Corporation."

Along with the usual disclaimers that the article is his personal opinion and not the official position of OCZ, DT, etc.

By just4U on 6/25/2007 5:25:06 PM , Rating: 2
I'd like to see more of this as well but again like other's I don't want them necessarily writing on their own products. It's like a big long ad you know? I don't mind it a little bit ... just not in excessive amounts.

By Performance Fanboi on 6/25/2007 2:55:12 PM , Rating: 2
I am thrilled to see this kind of information comping from a company rep without the thinly veiled self interest (see "Ripping the competition a new 20" - a self serving blog full of inaccurate and misleading statements from HP about a mediocre product and no real info). This post increases my already high level of respect for OCZ Technology. Keep it coming! Thankyou!

RE: Refreshing
By johnsonx on 6/25/2007 3:58:52 PM , Rating: 2
Yes, I second that. I found Rahul Sood's last blog a bit much. What's next, Bill Gate's blog on DT extolling the virtues of Vista?

Really great kind of article
By DeepBlue1975 on 6/26/2007 9:52:44 AM , Rating: 2
You can't find this kind of material everywhere, and it surely is very "comfortable" to be able to read about this in your favourite technology news sites.
Makes as more readily aware not only about technology evolution from a technology centred standpoint, but also information relative to the industries' ups and downs, production issues, political decisions and so on.
Really interesting stuff, at least it is for me and definitely would like to see more articles of this kind.

By peternelson on 6/26/2007 1:28:15 PM , Rating: 2
I found this interesting too, well written and well reasoned.

I'd welcome future contribution by Ryan and other like him.

Flash Drives
By kattanna on 6/25/2007 12:31:55 PM , Rating: 2

I'd really be interested in hearing your thoughts on flash memory finally being used in consumer level drives for laptops and desktops.

How do you see this market playing out, and what role does your company plan to take?

By Duraz0rz on 6/25/2007 12:49:52 PM , Rating: 2
So from what I'm reading, we can expect a shortage of DRAM in the coming months because a supplier is either holding back modules or upgrading their facilities?

Really glad I bought my OCZ DDR2 now than later :)

The OCZ part was coincidence, really. It was on sale @ Microcenter with a rebate :) ... good stuff, though!

Looking forward to reading more about the DRAM market from you, Ryan!

eh, not for me
By Trisped on 6/29/2007 1:25:46 AM , Rating: 2
I liked it when the blogs were not so technical and esoteric. They were by people that didn't have anything to prove who just wanted to talk about something that they thought was important.

While the article is applicable to system builders, it isn't to me. Whenever I buy computer parts I already know what I want, and wait for the best time to buy it. In my experience, the best time to buy RAM is in the June/July time frame before the OEMs start stocking for the school and Christmas season. Weather this RAM is going to be 10% off or 60% off is of little consequence to me, as it is still at the lowest price I can expect for at least a year, maybe more.

"Nowadays you can buy a CPU cheaper than the CPU fan." -- Unnamed AMD executive

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