In Trading Places, a movie starring Dan Aykroyd and Eddie Murphy that was released in 1983, two rich and miserly old men make millions of dollars by getting inside information on the orange juice commodity market. While the movie mainly served as a social commentary on class, race, and wealth in the U.S., the film also portrayed how fortunes can be made betting on commodity markets, which include coconut oil, wood chips, and, believe it or not, DRAM.

Business-wise, DRAM has more in common with commodities than semiconductors. DRAM spot prices fluctuate dramatically. DRAM is a device that serves a specific purpose whose function remains basically the same regardless of what you call it, which, by definition, describes what a commodity is. Suppliers are really more concerned about supply and demand issues than accommodating the demands of an overclocked chipset.

Most of the 800 million units of 257 Mbit modules shipped last year were made by a handful of suppliers, which operate huge, multibillion-dollar foundries. Module makers serve as the conduit between DRAM makers and the after market buyer who wants to upgrade or expand PC memory.

However, while the basic outline of the supply chain is straightforward, the dynamics of the market is anything but, which is why DRAM pricing fluctuates so wildly.

The State Of The DRAM Market

Analysts and industry observers all agree that volume sales of DRAM units are growing. Regardless of whether demand tanks or not, DRAM foundries have upgraded their processes to get better yields per wafer die, so that even if prices plummet, suppliers this year will make more DRAM units compared to last year. Also, OEMs will continue to demand more DRAM bits, at smaller per-unit costs, to pack into their PCs or other applications.

But aside from a consensus that suppliers will ship a greater number of DRAM bits this year, opinions and forecasts about pricing, demand, and supply represent a Pandora's box of forecasts and theories.

A bevy of variables affect DRAM prices and supply. On a grand scale, the multi-billion DRAM foundry operations of giants such as Samsung, Micron, and Infineon have a significant bearing on the DRAM market. These three DRAM makers produced the majority of the billions of DRAM units shipped last year. So when one of these suppliers turns on the production tap for one type of DRAM and shuts off another, ripples are felt around the world.

However, the foundry base is but one market force, albeit a significant one. There are new market trends that will likely have an affect on future DRAM and supply. These new dynamics also make predicting what DRAM pricing will do next that much more difficult.