Prices for mainstream multilevel cell (MLC) 8Gb and 16Gb parts declined 11% and 23%, respectively, while global DRAM contract pricing dropped after relatively high prices from April to June. Gartner says mainstream 1 Gb DDR2 prices dropped by 14.6% to $2.05, while pricing for 512 Mb parts was down 7%. The older devices saw some further pricing declines as well.

Gartner reports that DRAM spot market pricing has been edging down for weeks while contract market pricing stayed relatively firm after experiencing price increases from April through June. However, with fear of undersupply in late third quarter of 2008 and the fourth quarter of 2008, major PC OEMs are now burning off inventory that was accumulated during the second quarter of 2008, which has reduced demand and led to the price declines, says the researcher.

Module pricing fell to $19 and $38 for the 1-GB and 2-GB configurations, respectively, in late August, with the expectation that pricing in the first half of September will see further declines. Some market participants are talking about prices falling back during the next two months to the low point seen in April 2008, with the 1-GB module reaching $16 and the 2-GB possibly going as low as $32. Gartner expects any OEMs holding inventory will be quick to offload it with the expectation that pricing will decline further.

Spot pricing for DRAMs experienced its biggest weekly drop since the beginning of November 2007, according to Gartner. Average spot pricing across all densities and technologies was down 8.6% compared with the previous week, standing at $1.82 on a 1 Gb equivalent basis. Mainstream 1-Gb parts saw the strongest declines, with high-end pricing ranging down by 12%. The 512 Mb part also saw strong declines.

Gartner continues to project a strong revenue rebound in 2009, up 25.1%, but this is based on "mild" pricing declines in 2009 compared with the unsustainable pricing environment experienced in 2008. By 2011, the industry will likely enter a capacity-induced recession, according to Gartner's latest DRAM forecast.

Similarly, NAND flash contract pricing continues on its own downward spiral. This is during what is typically a seasonally strong time of the year, especially after three consecutive months of an oversupply situation, said Gartner. The problem is high inventories at vendors and customers because of stagnant end-consumer demand.

The 8-Gb and 16-Gb MLC NAND parts saw the biggest price declines. While 3-bits-per-cell NAND flash did enter the market recently, it has had a negligible impact on pricing because the cost advantage is not strong enough when produced at 56 nm, Gartner said.

NAND flash spot pricing also continued to slide. Lower prices were led by the commodity 8 Gb and particularly the 16-Gb MLC parts, whose low-end range of pricing fell to $2.25. On a weighted 1 GB average, spot prices sunk more than 4% to stand at $1.53.

In contrast, NOR flash memory pricing kept stable in August, after declining continuously for four months, with a range of 0.9% to negative 3.4% across all densities compared with July, reported Gartner. The main application for NOR flash is the cellular phone sector, which requires 128 Mb to 256 Mb densities; however, demand is decreasing with the use of NAND flash for data storage and code execution in the high-end handsets. Prices for 256-Mb NOR flash declined 0.03% to $3.98.