Memory prices are in freefall after the world market fell sharply last week.

A 64MB DRAM chip which had a spot price of $9 in mid 2000 was worth $2 last week.

Steve Tan, an Independent Commodity Information Services analyst, said: "This market is really crazy now."

Tan believes rumours that LG Electronics, Hyundai Electronics and Micron Technology are holding significant inventory - which they are attempting to offload - are depressing prices.

In the short term, he expects prices to continue falling as traders remain wary.

Memory-chip companies are already losing money at the current prices, and few are willing to comment on the state of the market and where prices may be heading.