The contract price of the most widely used DRAM chips, 512Mb, 667MHz DDR2 (double data rate, second generation), slid below £1 for the first time in the first half of May. Those looking to add more DRAM (dynamic RAM) to their PCs can therefore pick up a bargain throughout May and June, as memory chip prices continue to crash.

DRAM chips dropped 8.8 percent from mid-April to $1.94 per chip - about 97p - according to DRAMeXchange Technology, a Taiwanese company that runs an online DRAM market. These prices aren't likely to last longer than the next few months.

Falling DRAM rates can help offset recent increases in prices for LCD (liquid crystal display) panels, and keep PC prices in check. Users wanting to boost their system speed can also add more DRAM at a low cost.

At 97p each, the chips are well below the £1-£1.50 cost of production for chip makers, and they'll almost certainly shift their production strategies to reverse the decline. The second half of the year is also the strongest for PC sales, another factor that could stop the current downtrend.

DRAMeXchange said the DRAM market appears to be weaker than expected in May and June. Many companies in the DRAM supply chain, including module makers and PC vendors, have already built up inventories. Prices won't rebound until these inventories are worked down.

The fall below £1 - or more importantly $2 - was significant because of its relative ease, noted Gartner. There was less resistance to the psychologically important $2 level than expected, the industry researcher said.