The chips are down

Stealing silicon computer chips has been one of the boom industries of the past few years. Thousands of businesses in Britain and Europe have suffered, often at the hands of thieves stealing particular chips to order.

They don't bother taking the computer, they just rip off the casing and pull out the costly chips, like dentists extracting teeth. Even a relatively small haul of 10 chips could net a thief pounds 1,000-pounds 1,500. Little wonder then that organised crime gangs have become involved, forcing the police to form a special task-force to tackle the problem. Some estimates put the cost to Britain's economy alone at over pounds 1bn a year.

But this techno-crime boom could soon collapse because of a dramatic fall in the price of dynamic random access memory (D-Ram) chips, one of the most common targets of chip thieves, or "Ram-raiders" as they have become known. In the past three weeks alone, the price of a standard 4 megabyte chip has dropped by almost 25 per cent, and by two-thirds since the beginning of the year. And a decline in chip theft may sound the death- knell for the lucrative security and insurance industry that has grown up in response.

Though not as complex as the chip in the central processing unit, D-Ram chips are an essential component of all personal computers. They provide the temporary, quick-access memory that computers need to run the operating system and software applications.

As little as three years ago, a D-Ram capacity of just 2 megabytes was sufficient for most programmes. But the latest generation of software has been ever more hungry for memory, pushing up the minimum requirement, first to 4mb, then to 8mb. Things reached a hiatus with the arrival of Microsoft's Windows 95 operating system last year. Ideally, it needs 16mb to run smoothly and this unleashed a voracious new demand for extra D- Ram. But at the time, the major Korean and Japanese suppliers were unable to keep up. Consequently, D-Ram prices shot up.

Consumers were the losers, as manufacturers decided they could not afford to increase the memory capacity in their standard PCs. But they were quite happy to sell those machines with Windows 95, even though, as one expert says, they, "knew damn well Windows 95 needed 16 megabytes to run properly". It was as though cars were being marketed with engines the makers knew were inadequate.

Into this gap stepped the chip-lifters, spotting a very profitable new black market. This upsurge in computer crime in turn spawned another highly lucrative industry - computer security. Game Over, a UK company that sells secure computer cabinets, only moved into this area 18 months ago. "We are now selling over 20,000 units a year," says its owner, Simon Wingrove. Insurance companies have seen a similarly rapid expansion in policies for computer theft.

In the past six months, however, the supply-and-demand equation has shifted, to the point where there is now an "oversupply of chips", says Richard Gordon, an analyst with market research group Dataquest. Unexpectedly poor sales of PCs in the run-up to last Christmas reduced the pressure on D-Ram supplies. In addition, corporations have not switched to Windows 95 as rapidly as predicted, opting instead to continue with their existing Ram capacity. Over the same period, Ram supplies have also increased, as new plants have come on stream and existing ones have become more efficient.

The result, Mr Gordon says, is that "a basic Ram chip that cost $14 in 1995 now sells for perhaps $3.50". Translated into the cost of upgrading a machine from 4 to 8 megabytes, you should soon be able to do it for as little as pounds 40, compared with pounds 160 last year. Suddenly, the economics of stealing D-Ram chips do not look quite so special. "I think someone should tell the Ram-raiders the market's eroded," says Mr Gordon.

There is no immediate sign that the chip-lifters have got the message. "Computer crime still appears to be increasing in most areas of the UK," says Detective Superintendant James Perry, who sits on the Metropolitan Police's Joint Action Group on computer crime. And the real figure for computer theft could be even higher, says Mr Wingrove.

"Businesses don't want anyone to know when they've been raided," he says, "because it can bring them down. They can't operate if their computers are not working and so they lose custom. So everyone is trying to be very discrete about it."

Mr Wingrove concedes, however, that the demand for computer security will eventually slow down if the current trend continues. "If chip prices stay low for a couple of years, or manufacturers make chips worthless to steal, then it won't be worth companies spending so much on security."

Whatever happens to the Ram-raiders and the security industry, consumers should start to benefit. By Christmas this year, once all the 8mb machines in company stockrooms have been sold off, Mr Gordon anticipates that every PC in the shops will have 16 megabytes of Ram as standard.