1Gb memory chips becoming the new standard

All of the premium versions of Vista require more DRAM per PC to ensure smooth operation of the OS, which is more complex and requires more hardware power than its predecessor, XP.

The changeover in the DRAM market has taken longer than many companies expected. Several DRAM makers built new factories in anticipation Vista would take the PC market by storm this year and antiquate XP. That hasn't happened. Instead, the adoption of the new OS is moving along at a steady pace, albeit slower than the DRAM industry expected.

The heavy investment in DRAM factories, however, has caused a massive oversupply. Prices of most DRAM chips have fallen by over 70 percent so far this year, and are currently near or below the cost of production for most companies.

The contract price of 1Gbit, DDR2 (double data rate, second generation) DRAM chips that run at 667MHz fell 12.5 percent from two weeks ago to US$2.63 each, a new low for this year according to DRAMeXchange, which runs an online trading site for the chips. The most recent DRAM slump hit in early October, as prices fell by 25 percent. Analysts said the market may not turn around until late next year, and possibly later if companies keep building new production lines.