Why DDR2 is more expensive than DDR3 - Pic courtesy of Elpida

Manufacturers of memory find themselves between a ROC and a hard place  as they ramp up production of DDR3 memory.  The price of DDR2 is now more than the price of DDR3. How can this be?

The answer, according to vendors we spoke to when we were in Taiwan last week is a little complicated.  The Dramurai had hoped that the crossover between DDR2 and DDR3 would have already happened but something called the global recession put paid to that.

So while nearly everyone zipped up their purses and completely put out of their heads the idea that they would buy new PCs, quite a lot of people decided to upgrade their memory for their existing machines.

Coupled with that, the DRAM manufacturers decided to slow down producing DDR2 memory and now that's their difficulty. People still want to upgrade their existing machines and so they want DDR2. And the crossover doesn't look likely to happen for some months yet.

The entire industry is hoping and praying that during the second half of this year the long awaited refresh will come in the enterprise market.  All the evidence points to that happening and industry bellwether Intel is more optimistic than many others.

There's still a lot of fearful people out there in the semiconductor industry.  As Martin Penn of Future Horizons pointed out, this caution is already having a deleterious effect on the industry.

There's already a shortage of silicon wafers and he's predicting that is going to get so acute that we'll end up with lots of parts being on allocation.

It's those who don't control their own destiny that will suffer most, says Penn - and those are the fabless and "fablite" companies.