There is something funny going on in the DRAM industry and it is probably not good news for computer users.  Back in September, it was announced that worldwide DRAM production had dropped by 22% and by 55% in Taiwan.  That slowdown was reflected in the price of DDR2 rising by 75% over this past month.  That will really eat into the profit margins of anyone involved in the memory business, as consumers are unlikely to deal well with a price hike to ageing DDR2 DIMMs.

This price problem, which is caused by a drop in supply, not by mystical fairies waving their magic wands and making entire production lines disappear, seems to have triggered a reaction from Micron. Micron is looking to form an alliance of all non-Korean memory manufacturers, essentially the US, Japan and Taiwan, and divide the memory market into Korean and non-Korean manufacturers.  Three parent companies, Micron, Elpida Memory and Nanya Technology would lead the way in R&D, while the remaining companies would be left to make the actual memory.  Sounds like this plan, if successful will exacerbate the supply problem even further.

Now, we hear that Intel and AMD have both decided against switching to DDR3 only chipsets until 2010, a year later than expected.   DigiTimes mentions that AMD’s AM3 DDR3 controller is having problems and Intel is disappointed that people don’t seem to want to pay $500 for just their memory and motherboard.  Even if AMD doesn’t have a solution to it’s supposed on-die memory controller issues, the incentive to switch to a DDR3 only chipset is lacking; the price is too prohibitive for consumer to upgrade.  Intel can simply continue offering Core i7 motherboards that can use DDR2.

The question is, what are the memory manufacturers up to right now, and what does the rising costs of DDR2 have to do with the very slow reduction in DDR3 prices?

“Although both Intel and AMD were originally expected to fully transition to DDR3 across their product lines in 2009, with the two players now postponing their DDR3-only chipset schedules, the DDR3 generation is not expected to arrive until 2010, according to sources at motherboard makers.

Since DDR3 memory prices have not fallen as much as Intel expected, while demand for its Core i7 CPU and X58 chipsets also has not yet met expectations, Intel has decided to postpone its DDR3-only 5-series chipsets until September this year.

Meanwhile, AMD’s is still struggling with technical difficulties to achieve stability and compatibly with the DDR3 controller built into its AM3-based CPUs, and so the company is also unlikely to transition to DDR3 until it is able to come out with a workable BIOS, added the sources.”

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