Don't expect memory to become any cheaper this year, memory maker Micron has warned.

"DRAM prices have come back a little bit," said Micron CEO Steve Appleton in an interview with Reuters. "Although [prices] are not that strong, we expect them to be stable or improve for the rest of the year."

Appleton based his prognosis on rising demand in the back-to-school period and the results of memory makers transferring production lines to NAND Flash instead of DRAM.

Either way, Appleton said he expects the company's gross margins to rise in the company's most recently complete quarter, its fourth, which came to a close at the end of August. It too is producing more NAND Flash - much in demand from memory card and MP3 player makers - and has shifted its DRAM production to higher-end, higher-margin memory specifications.

"Our margins will improve greatly for the quarter. We think they will be at least stable or improving for the rest of the year," Appleton told the news agency.

During its third quarter, ended 2 June 2005, Micron lost $128m (20 cents a share) on sales of $1.05bn, both below analyst expectations. Its gross margins slumped to 8.2 per cent from Q2's 27 per cent.

Appleton could not say what Q4's numbers are, but he did claim market watchers will view them as being "very positive".

Q1 FY2006 may prove less well-received. Appleton warned that while there's no sign yet of consumer spending being slowed by rising energy costs, they could well have an impact this Christmas.

"If we continue to see oil prices rising, it will dampen the Christmas season in terms of the consumers' ability to buy," he warned. ®