DRAM pricing trends — The π rule

The key factor in the rapid growth of the semiconductor-memory industry is the low cost of packaged memory chips. The authors have monitored the pricing trends of DRAM chips in the past 14 years and observed a surprisingly regular behaviour in the rate of price reduction and in the time interval of introducing a new DRAM with a 4:1 density improvement. They have found that the initial high price of a new DRAM declines rapidly with a rate |dP/dt| much larger than $1/year, where P is the average price per packaged DRAM chip in dollars and t is the time in years. The rate approaches $1/year at a price level of about $3. This price level is of critical importance because it corresponds to the peak volume of DRAM shipment as well as the maximum return on investment of the DRAM project. This price level is designated the π level because the transcendental number π has a value fairly close to three. Beyond the π level, the price continues to decline and eventually settles at a level corresponding to about one-half the price at π level, i.e. $π/2. The illustration may also be used as a reference for the pricing trends of static random-access memories (SRAM). A SRAM with a given number of bits is approximately four times more complex than a DRAM having the same number of bits. Therefore, for SRAMs, the pricing curves will be shifted by one generation.