County Firms Battling Shortage of Personal Computer Memory Chips : SCIENCE/TECHNOLOGY
An industrywide shortage of memory chips used in personal computers and work stations continues to plague some Orange County high-tech firms. One bright spot in the situation is that chip prices, which early this year were zooming upward, have begun to stabilize.
“The supply situation continues to be very tight,” said John S. Cain, chief financial officer of Alpha Microsystems, a Santa Ana computer company.
The shortage of dynamic random access memory chips (DRAMs) began last fall and has since grown into a major problem for the electronics industry. Local executives say they don’t expect the shortage to ease before early 1989.
“We’re not out of the woods yet,” said Michael Morand, senior director of systems marketing for AST Research, an Irvine personal computer maker.
When chip prices were soaring last March, AST was one of the first computer makers to respond to the problem by raising prices by 10%. Other computer companies since have followed suit. Although the cost of certain chips has fallen slightly since May, prices generally have stabilized at a high level.
So far, Alpha Micro said it has resisted raising prices of its business computers. “We want to stay more competitive and enhance our reputation with dealers,” Cain said.
Memory chips typically represent 15% to 20% of the total cost of a personal computer, so manufacturers who don’t raise prices must accept lower profit margins.
The shortage has forced Alpha Micro to redesign some of its products. The Santa Ana firm has switched from 256-kilobit DRAMs--the most common type of chip used in personal computers--to more powerful one-megabit chips. The megabit chip, which is the newest generation of chip, can store about four times as much information as a 256-kilobit device.
One-megabit chips have also been in short supply as chip manufacturers switch production to the newer devices. Local executives said supplies of the megabit chips are expected to improve later this year.
