Analysts: PC Memory Supplies Running Low

Inventories at makers of dynamic random access memory (DRAM) chips dropped to their lowest level in 20 months due to growing sales of personal computers in the so-called back-to-school season, iSuppli Corp. said.

The U.S. research firm expected the inventory decline to continue this month and raised its rating of the near-term DRAM market conditions to "positive" from "neutral" in a report. It issued the neutral rating in July.

DRAM inventories stood at 1.92 weeks at the start of August, down 18 percent from July's average level, as PC sales were surging before the beginning of a new academic year, iSuppli said in a report dated September 5.

Lower prices of microprocessors left more money at PC makers to spend on memory chips. Also, major chip makers have shifted production capacity to NAND flash memory, used in digital cameras and music players, which slowed DRAM shipment growth.

"With inventories at rock-bottom levels, DRAM prices are beginning to rise on the spot memory market," iSuppli principal analyst Kim Nam-hyung said.

Kim forecast contract prices to continue to rise in the first half of September after an increase in August.

However, increasing DRAM production at leading maker Samsung Electronics Co. Ltd. could drive down prices later this year, iSuppli said.

Samsung, the world's biggest memory-chip maker, appeared to be converting some of its NAND capacity back to DRAM to cash out on higher margins for the computer memory chips, it said.