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Commodities

Memory chip prices up on rising smartphone output

Supply squeezed as manufacturers prepare for end-of-year sales

A store selling Oppo and Vivo smartphones in India.

TOKYO -- Prices of semiconductor memory chips are on the rise, as shortages that began last year are exacerbated by smartphone production entering into full swing in the summer.

NAND flash memory delivery prices for manufacturers in July stood at around $3.50, up 13% from a month earlier, for the benchmark 64 gigabit, triple-level cell type used in personal computers. "We do not receive even half of the orders we make," said the Japanese arm of Taiwanese memory module maker Transcend Information.

DRAM memory prices rose 3% on the month to about $3.10 for the standard 4Gb DDR3.

Chip supply is tightening as smartphone manufacturers ramp up production ahead of the end of the year. Up-and-coming Chinese smartphone makers like Vivo and Oppo Electronics adjusted output in the January-June period, but local shipments as well as those to emerging nations are healthy. Production looks to have recovered to previous-year levels in July.

With the growing popularity of transmitting videos and high-resolution images, China's Huawei Technologies and others are generating strong sales of smartphones equipped with higher storage capacity. 

Chipmakers appear to be prioritizing shipments for smartphones, for which demand is on the rise, in turn squeezing supply for use in PCs.

Nintendo, which is seeing solid sales of its Switch game console, announced plans to boost production in July and August. Since the console uses the same DRAM chips as smartphones, the component's shortage may worsen down the line.

Higher costs for such an essential component will likely cause prices of the final product to surge. Apple's new iPhone, set for release as early as this fall, is expected to cost more than $1,000 for its top pricing model, says Yasuo Nakane, a senior analyst at Mizuho Securities. PC makers will "likely limit the frequency of discounts they offer after sales begin," according to a major domestic manufacturer.

(Nikkei)

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