DRAM prices could skyrocket after already doubling in the last year

No relief in sight.

Don't be surprised if that DRAM kit you've been looking at goes up in price. According to IC Insights, the average selling price (ASP) of DRAM has more than doubled in the past 12 months and is still on the rise. Looking at 2017, the market research firm expects DRAM pricing to jump by 40 percent or more by the end of the year, which would be its largest annual increase ever (going from January to December).

"Just one year ago, DRAM buyers took full advantage of the oversupply (excess capacity) portion of the cycle and negotiated the lowest price possible with the DRAM manufacturers, regardless of whether the DRAM suppliers lost money on the deal. Now, with tight capacity in the market, DRAM suppliers are getting their 'payback' and charging whatever the market will bear, regardless of whether the price increases hurt the users’ electronic system sales or causes it to lose money," IC Insights says.

These price hikes are being passed onto consumers, as one might expect. Take for example this Corsair Vengeance LPX 8GB DDR4-2400 memory module. It was selling for around $36 a year ago on Amazon, but is now priced at $80 (it was hovering close to $90 recently). The same goes for this Crucial Ballistix Sport 16GB DDR4-2400 memory kit—it's currently listed at just under $154, versus $73 a year ago.

Adding insult to injury, IC Insights says all three remaining major DRAM suppliers are pulling in record profits. Micron is one of them. It reported a net income of $1.65 billion on $5.57 billion in sales, giving it a 30 percent profit margin for its fiscal third quarter in 2017 (ending in May 2017). This is after losing $170 million in its fiscal fourth quarter in 2016 (ending August 2016).

SK Hynix is doing even better. In the second quarter of this year, it reported a net profit of $2.19 billion on sales of $5.94 billion, resulting in a 37 percent profit margin. That's up from a $246 million profit in the same quarter a year ago. And with only a few memory chip makers remaining, there isn't likely to be any relief on pricing, at least anytime soon.

"Previously, when DRAM capacity was tight and suppliers were enjoying record profits, one or more suppliers eventually would break rank and begin adding additional DRAM capacity to capture additional sales and market share. At that time, there were six, eight, or a dozen DRAM suppliers," IC Insights said.

We've offered this advice before but the bottom line here is that if you're need of a memory upgrade and spot a good deal, you should probably pull the trigger.

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