Asia DRAM Report:Cheaper PC Parts, Better Christmas Buys

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Tuesday 9 November 1:35 PM

Asia DRAM Report:Cheaper PC Parts, Better Christmas Buys

     By Dan Nystedt
     Of DOW JONES NEWSWIRES

(This story originally ran at 1057 GMT Monday.)

TAIPEI (Dow Jones)--The Grinch came early this year for personal computer parts makers - and that should mean better bargains for consumers this Christmas.

The October-November period is historically the peak season for computer-related firms, as stores scramble to load up on parts ahead of the Christmas-season rush. Prices for some key components used in desktops and notebooks softened in the third quarter, and weakness in computer memory chip prices indicates the pre-Christmas inventory buildup may already be over.

That bodes well for PC consumers looking for good buys this year.

"I think most of the reduced cost (of computer parts) has been passed to the consumer," said Gianfranco Lanci, president of Acer Inc.'s (2353.TW) international operations business group, during the company's third-quarter investors' conference last week.

He said PC retailers like Acer, the fifth biggest in the world, aren't able to enjoy the price benefit themselves because of stiff competition from rivals like Dell Inc. (DELL) and Hewlett-Packard Co. (HPQ). They have to cut PC prices as fast as possible to stay competitive and move products out of their warehouses.

The biggest declines in key components have hit liquid crystal display screens, one of the most expensive parts of a computer. Screen makers like the world's largest, Samsung Electronics Co. (005930.SE), and No. 2 LG.Philips LCD Co. (LPL), have already reported falling gross margins for the third quarter due to price declines for LCD screens.

In late October, the world's third-biggest screen maker, Taiwan's AU Optronics Corp. (AUO), echoed the negative impact of weak screen prices on its margins and predicted average selling prices would continue to decline in the fourth quarter.

In the third quarter, average selling prices for larger LCD screens used for computer monitors and LCD TVs fell to US$215 apiece from US$281 in the April-June quarter, according to the Taiwanese company.

Prices of computer memory chips, called dynamic random access memory, have also slipped.

Spot prices of the most popular DRAM - 256-megabit double data rate memory that run at 400 megahertz, or DDR-400 - fell to US$4.48 each early Monday, down 7% from its recent peak a month ago of US$4.82, and 32% off its year high of US$6.55, according to online chip clearinghouse DRAMeXchange.

DRAM prices "already peaked in October and we're moving into the slow season," said James Huang, chip analyst at SinoPac Securities in Taipei.

He said PC makers already have sufficient supplies on hand and won't need to increase spending on the chips for the rest of the year.

This should send DRAM chip prices even lower, further benefiting PC consumers as Christmas nears.

               Table Of Average Weekly DRAM Spot Prices
                Nov 8    Nov 1   25 Oct  18 Oct  11 Oct
128Mb SDRAM -   $3.82    $3.88   $3.90   $3.88   $3.91
256Mb SDRAM -   $4.52    $4.51   $4.43   $4.38   $4.42
128Mb DDR-266 - $2.96    $3.00   $3.04   $3.04   $3.05
128Mb DDR-333 - $3.04    $3.10   $3.13   $3.13   $3.13
256Mb DDR-266 - $4.25    $4.40   $4.46   $4.52   $4.55
256Mb DDR-333 - $4.32    $4.47   $4.48   $4.53   $4.58
256Mb DDR-400-  $4.53    $4.66   $4.69   $4.72   $4.77

Sources - brokers, module makers, DRAMeXchange

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