Price imbalance bodes well for top chip makers

Signs of a “bit cross” have emerged in the market for dynamic random access memory, or DRAM. With a bit cross, the nation’s chip makers are likely to shine this year.
When the price of 1 gigabit DRAM, mostly used in personal computers, drops below the price of two 512 megabyte DRAM, the resulting phenomenon is called a bit cross.
Under such a situation, consumer demand for 1Gb DRAM chips, which have a bigger capacity and lower price tags, increases, meaning that the most-sought-after products on the DRAM market go from being 512Mb chips to 1Gb chips.
According to DRAMeXchange, a Taiwanese market research firm, the spot price of 1Gb DDR2 DRAM closed at $1.97 as of Thursday. The price is lower by 3 cents than two 512Mb chips, which have the same storage capacity as a 1Gb DRAM.
During a bit cross, consumers have easy access to chips with a high storage capacity.
The most recent bit cross is mainly attributed to a plan by the world’s chip makers to cut production. Since the companies struggled with nose-diving chip prices last year, they have tried to minimize a further decrease in prices by cutting production.
Taiwan-based chip manufacturer ProMos will stop manufacturing for 10 days ahead of the Lunar New Year’s holiday, while other chip makers, such as Germany-based Qimonda AG and Japan-based Elpida Memory, are reportedly considering temporarily suspending chip production.
The nation’s leading chip makers, Samsung Electronics and Hynix Semiconductor, are also likely to capitalize on the bit cross.
As most PCs come with 1Gb DRAM these days based on consumer needs, Samsung and Hynix, which are able to produce 1Gb chips with their 60-nano technology, are expected to take a bigger share of the staggering DRAM market.

By Kim Chang-woo JoongAng Ilbo/ Sung So-young Staff Reporter [so@joongang.co.kr]