As industry insiders predicted less than a month ago, DRAM prices have continued descending through August and the market is still surrounded by uncertainty for the remainder of 2011. According to DigiTimes' contacts, DRAM chip suppliers are struggling to combat increasingly thin profit margins as they cut prices to encourage sales.

Spot quotes for 2Gb DDR3 parts have dipped to less than $1 with eTT chips of the same density nearing $0.70 – not far off from the price of 1Gb chips last month. In July, 1Gb and 2Gb chips were set at $0.75 and $1.59.

The decline is largely attributed to an oversupply of DRAM, as memory production is said to be outpacing the growth rate of PC sales and server deployments. Although major players are taking a hit by lowering prices, it's the only way to remain relevant in the short term.

To address that issue, companies will have to focus on decreasing operating costs and improving production efficiencies. For instance, Samsung (and presumably others) have accelerated their transition to smaller chip fabrications (20nm in Samsung's case) to reduce production costs.

Naturally, DRAM packaging and testing firms are also feeling the heat. In a separate report, DigiTimes notes that Siliconware Precision Industries (SPIL) has exited the business and has sold its production equipment used to package and test DRAM products. ChipMOS Technologies purchased SPIL's facilities but claims it will reduce its reliance on the DRAM market.

Likewise, Advanced Semiconductor Engineering (ASE) will scale back its operations and is mulling the possibility of merging with its parent company if the market doesn't rebound.