Why is DDR memory so expensive?

[Whiterabbit]

I thought I'd save some money by going with DDR2 memory. I guess that was a no-go.

I don't understand why a newer memory would be SO MUCH cheaper than the old. Usually sellers want to dump old stock to get the new, so we'd expect DDR3 to be more expensive than DDR2 (which it is) and DDR2 higher than DDR (which it isn't)

Can anyone clue me in?

[dr_st]

DDR is old, no longer manufactured in large quantities. Supply is low. Overheads in manufacturing are higher, so the manufacturing costs per unit are higher.

Same thing is happening to DDR2/DDR3 now. DDR2 prices are already on the rise (they have doubled in the past few months, at least for desktops). DDR3 prices are falling, and will soon be lower than DDR2.

[rkawakami]

Usually it's a matter of what wafer fab process is/was being used to make the memory, the "backend" costs and the laws of supply and demand. Newest memory (e.g., DDR3) uses the top-of-the-line, most recent manufacturing technology and therefore is fairly high cost. Never mind that the smallest geometries are being used, which means more parts per wafer and therefore there should be a lower cost per part. The "backend" costs are basically packaging and test. Packaging cost haven't changed too much over time but test costs increase as the size of the memories increase.

With semiconductor memory, prices over time looks like an inverted bell curve. They start off very high when first introduced to the market. As more and more fab capacity is turned on and the technology becomes more mature, overall costs are driven down and the market price (usually) follows. During the mid-point of the product's life, as more and more fabs are cranking out millions and millions of parts and flooding the market (oversupply and reduced demand), it reaches a point where the ASP (average selling price) is LOWER than the actual cost to make the part. In other words, the more parts a company makes and ships, the more money it loses. Such was the case for the memory market last year when several companies disappeared. As newer and better technologies are developed (fab processes and memory designs), it doesn't make any sense to continue building parts with the older recipes. As time marches on those "obsolete" parts start increasing in market price simply because they are scarce. Prices rise about the equivalent cost/MB when compared with current memory designs. This is why is people on eBay are still getting $25 for a 256MB low density PC133 SDRAM module, when you can get a 1GB DDR3 SODIMM for under $20.