Why has RAM gotten so expensive?

[seumasbeathan]

So maybe I have missed something, but over the last few months I have seen ram really increase in price. Around December time I was seeing 8GB Corsair Vengeance 1600Mhz for £35 sometimes, now it's like £59.99 everywhere. And on aria the cheapest 8GB kit I could find was a 1333Mhz value kit for £53.99

Does anyone know why?

 

[SeekaX]

haswell? i really don't know, but it's pissing me off. could get vengeance 8gb 1600mhz ram for 30€ a few months ago, now it's close to 50€.
/edit
holy shit, last time i looked it was at 48€, that wasn't even a month ago. now cru3l linked me the ram and it's at 62€! that was the price of dominator platinum ram just a few months ago!

 

[jamesriley94]

I have no idea to the real reason -

But, we are getting closer and closer to DDR4. When we went from DDR2 to DDR3, companies started investing more into the R&D and production of DDR3 modules, and so DDR2 came in less supply, thus driving prices up.

I know we're still a way off DDR4, but I would kind of imagine that the companies are putting more time and effort into that nowadays than in the past, and so stocks and supply of DDR3 may be falling a little low.

We did used to see, as I'm sure Seumas remembers, Exceleram at Aria, going for just over £20 for an 8gb kit of 1600mhz RAM. We don't hear anything from the smaller brands like that anymore.

I'd guess that the memory modules themselves are produced by only a few smaller companies world wide, and so if they've put prices up, or cut back production, it would seem fitting that the smaller companies, such as Exceleram are struggling to survive and sell their products for the low prices that we used to see.

 

[SeekaX]

I have no idea to the real reason -

But, we are getting closer and closer to DDR4. When we went from DDR2 to DDR3, companies started investing more into the R&D and production of DDR3 modules, and so DDR2 came in less supply, thus driving prices up.

I know we're still a way off DDR4, but I would kind of imagine that the companies are putting more time and effort into that nowadays than in the past, and so stocks and supply of DDR3 may be falling a little low.

We did used to see, as I'm sure Seumas remembers, Exceleram at Aria, going for just over £20 for an 8gb kit of 1600mhz RAM. We don't hear anything from the smaller brands like that anymore.

I'd guess that the memory modules themselves are produced by only a few smaller companies world wide, and so if they've put prices up, or cut back production, it would seem fitting that the smaller companies, such as Exceleram are struggling to survive and sell their products for the low prices that we used to see.

DDR4 will release in Q4 i think, a bit early to cut down DDR3 production.

 

[jamesriley94]

DDR4 will release in Q4 i think, a bit early to cut down DDR3 production.

Whether it's cutting down production, or just investing more into R&D of DDR4, the producers still will have higher costs because of it, and they'll pass on the higher costs to the consumers.

 

[seumasbeathan]

We did used to see, as I'm sure Seumas remembers, Exceleram at Aria, going for just over £20 for an 8gb kit of 1600mhz RAM. We don't hear anything from the smaller brands like that anymore.

Yeah, I think it was £23.99 wasn't it? Really nice looking RAM to

 

[alpenwasser]

As usual, there's not really one clear cause for this but more of a network of interacting effects.

• The floodings in Thailand in 2011 resulted in shortages for several PC components (most notably HDDs), therefore the number of PCs sold dropped.
• Since nobody was really prepared for this, including DRAM manufacturers, prices for pretty much everything that was not affected by those floods dropped significantly since there was suddenly a massive oversupply.
• One of the DRAM manufacturers, Elpida, filed for bankruptcy in 2012. It was later bought by Micron. How exactly this affected DRAM prices is difficult to tell (at least for me), but manufacturer consolidation usually means less drastic price falls (since less competition), or even price increases (eventually, stabilization). For a good example on this, see the HDD market. There is a long list of defunct HDD manufacturers which have fallen victim to market consolidation over the decades. Once the market is consolidated as much as authorities will tolerate (usually they will not allow a complete monopoly), prices tend to stabilize. If they fell drastically before this, they might increase first until a plateau has been reached. HDD prices were low before the floods, but they were comparably stable from what I recall, and since recovering (more or less) from the price spikes caused by the floods, they have been very stable (at least where I live).
• According to some articles I've read over the months, the DRAM market is extremely volatile. Meaning: Very slight oversupply will result in drastic price falls, very slight overdemand will result in very drastic price increases.
• DRAM manufacturers have started to reduce the numbers of shipped units. Since they were barely (if at all) making profits on those low prices, they simply seem to have decided to throttle supply, thus increasing prices. I think this might be the most important factor for the price increases we're seeing right now.

I'm by far not an industry expert though, this is just info I picked up over time (the past few months) from various sources, so it might all be BS :lol:

 

[seumasbeathan]

I guess £60 still isn't a massive price for some decent RAM, its just the fact that the price has increased by literally 70-80%

 

[SeekaX]

Whether it's cutting down production, or just investing more into R&D of DDR4, the producers still will have higher costs because of it, and they'll pass on the higher costs to the consumers.

ye well but that is no excuse for doubling the prices. it's like back a year ago when thailand was flooded and the HDD prizes exploded.

 

[alpenwasser]

exploded.

Perfect choice of words

 

[SeekaX]

Perfect choice of words

a bit of drama is allowed

 

[jamesriley94]

ye well but that is no excuse for doubling the prices. it's like back a year ago when thailand was flooded and the HDD prizes exploded.

Yes it is. Natural economics, cut down on supply leads to higher prices, just the same as higher costs through an increased R&D expenditure also leading to higher prices.

 

[Dicehunter]

It could simply be down to 1 thing, Greed.

 

[jamesriley94]

It could simply be down to 1 thing, Greed.

Not with every company doing the same...

That would fall under to illegal cartels which would have been stopped by the world trade authorities.

 

[WillSK]

Not with every company doing the same...

That would fall under to illegal cartels which would have been stopped by the world trade authorities.

Yeah as James says, price fixing on that scale is very illegal albeit done often. E.g. Tesco and other supermarkets fixing milk prices in the past

 

[alpenwasser]

Not with every company doing the same...

That would fall under to illegal cartels which would have been stopped by the world trade authorities.

Not necessarily. For the world trade authorities to be able to step in there needs to be actual collusion going on (and they need to be able to proof it or at least have strong indications of that happening), at least last time I checked.

Competitors not pressuring each other in some sort of "silent understanding without active collusion" is quite tricky to prevent if you have only very few competitors (see HDD market as another example besides the DRAM market). So long as all competitors are more or less satisfied with their market share and profits they have less motivation to push their competitors out of the market completely.
This doesn't happen in all markets with few competitors, of course.

Here in Switzerland we have some sort of price watch dog authority guy who can step in if prices are unreasonably high without there being an actual (illegal) cartel. He's quite busy with the telecommunications companies at the moment .
I am not sure if something like that exists on an international level though.

In general, the fewer competitors you have, the easier it is for them to reduce price pressure on each other without there actually needing to be a cartel. And that is, to the consumers' detriment, not illegal in and of itself (I think, maybe an expert could clarify. I'm unsure how authorities would go about fixing this though without having an international price watchdog).

EDIT:

Yeah as James says, price fixing on that scale is very illegal albeit done often. E.g. Tesco and other supermarkets fixing milk prices in the past

That's another thing of course. Something being illegal does not necessarily deter companies from doing it. The most likely punishment if you get caught is a fine. So as long as

(profits w/ price fixing)-(fines to pay)>(profits w/o price fixing)

there's still enough incentive to do illegal shenanigans for some companies. And then there are still those who operate under the assumption that they won't get caught of course.
/EDIT

 

[jamesriley94]

Not necessarily. For the world trade authorities to be able to step in there needs to be actual collusion going on (and they need to be able to proof it or at least have strong indications of that happening), at least last time I checked.

Competitors not pressuring each other in some sort of "silent understanding without active collusion" is quite tricky to prevent if you have only very few competitors (see HDD market as another example besides the DRAM market). So long as all competitors are more or less satisfied with their market share and profits they have less motivation to push their competitors out of the market completely.
This doesn't happen in all markets with few competitors, of course.

Here in Switzerland we have some sort of price watch dog authority guy who can step in if prices are unreasonably high without there being an actual (illegal) cartel. He's quite busy with the telecommunications companies at the moment .
I am not sure if something like that exists on an international level though.

In general, the fewer competitors you have, the easier it is for them to reduce price pressure on each other without there actually needing to be a cartel. And that is, to the consumers' detriment, not illegal in and of itself.

EDIT:


That's another thing of course. Something being illegal does not necessarily deter companies from doing it. The most likely punishment if you get caught is a fine. So as long as

(profits w/ price fixing)-(fines to pay)>(profits w/o price fixing)

there's still enough incentive to do illegal shenanigans for some companies.
/EDIT

There does have to be proof yes (and it is often very hard to prove...) but, if the world wide price of RAM near enough doubled without a proper reason behind it, then the WTO and relavent authorities in the individual countries too would definitely be investigating.
Price increases like that don't go unnoticed by the authorities - and we certainly would have heard about it.

As for the Tesco example - far worse things go on with Tesco and the UK milk market...
They've been putting huge orders in with farmers for years, then cancelling it days before the sale, leaving farmers with huge surpluses that they're unable to shift. Then Tesco steps back in to say: 'Ok, we'll take the milk, but at 30% of the original price we agreed on'... Then the farmers have no other option but to say yes.
That's one of the main reasons I don't go to Tesco, although of course it's still quite common practice with supermarkets - and worst of all, there's no illegality behind it all.

Some of the smaller stores like Waitrose are starting to get ahead of this and buy the farms themselves to produce the milk, so the farmers are treated fairly, and we still get reasonable prices from it too.

Anyway...slightly gone off topic there

 

[WillSK]

Yeah as you say alpenwasser if the profit incentive is there then many companies will carry on. A famous taxi service in the UK "Addison Lee" has openly admitted that it would rather pay the fines for using the London exclusive bus lanes than lose out on customers.

I have to say though In my opinion the reason for this sudden price raise is R&D investment in DDR4 and companies realising they can no longer compete on price due to having these expenses. I think if the prices were to remain the same then the companies would need to recoup the cash lost by charging ridiculous DDR4 prices which people wouldn't pay

EDIT: Yeah James i'm well aware of the unfair treatment to farmers in certain cases but was just using the price fixing as an example

 

[alpenwasser]

There does have to be proof yes (and it is often very hard to prove...) but, if the world wide price of RAM near enough doubled without a proper reason behind it, then the WTO and relavent authorities in the individual countries too would definitely be investigating.
Price increases like that don't go unnoticed by the authorities - and we certainly would have heard about it.

Of course, suspicion prompts investigation. Agree on that. I'm neither an economics nor a judicial expert (especially not on international trade laws, I would never do that to myself :lol, my conclusions are based on vastly incomplete knowledge and some logical conjecturing ^_^.

Anyway...slightly gone off topic there

Oh dear god, how did we get here!?
On the other hand, who'd have thunk that I'd be debating about milk prices on a computer tech forum some day :lol: (and very interesting to know about Tesco's practices, they do not sound like nice people :whipping.



EDIT: Aargh, I'm way too slow today, people keep outposting me. This thread is starting to resemble a chat room more than a forum :lol:

I have to say though In my opinion the reason for this sudden price raise is R&D investment in DDR4 and companies realising they can no longer compete on price due to having these expenses. I think if the prices were to remain the same then the companies would need to recoup the cash lost by charging ridiculous DDR4 prices which people wouldn't pay

Might also be a factor, yes. Would be interested to know more about R&D costs in the DRAM market in general.
/EDIT

 

[SieB]

http://www.eteknix.com/dram-production-will-be-limited-during-2013-to-2014-micron/