Spot price went up last week on lack of new DRAM chip supply, while contract prices tumbled another 5%. It is projected that after the 2007 Taipei Computex draws to a close, prices will have a chance in experiencing a rebound. Elpida's CSO has suggested his bullish view to 2H07 and he anticipate supply may tighten in 2H07.
|
Beginning from Jan07, mainstream DRAM DDR2 chip prices began to spiral downwards. Up until now, although prices have rebounded sometimes, they have occurred only three times, ranging merely between 10%-15%, and lasting for less than 10 days. According to DRAMeXchange's database, the average price of the DDR 2 tumbled 20% QoQ in 1Q07, and in 2Q07, it is expected to decline a whopping 50% QoQ. When the mainstream DDR2 512Mb 667MHz chips slipped below USD 2, it attracted many buyers to take advantage of the inexpensive chips in stocking up on their inventory. Nevertheless, amid the continuing growth in supply and the hot season not arriving yet, the increased chip buying was not sufficient enough in keeping up the DRAM prices. The market outlook of the DRAM industry has started to look gloomier. With prices already below the manufacturing costs, major DRAM makers have expressed an unwillingness to cut their prices further in clearing out their excess inventory. Current market observations show the DDR2 chip price possibly bottoming out. If this occurs, it should drive up the chip demand, and spur a rebound in the spot price.
|
For last week, the spot market showed no increase in demand, as prices slipped more than 10%. Hovering between the USD1.35-1.50 level, the DDR2 512Mb (64Mx8) 667MHz eTT plunged to a low of USD1.32. DDR2 512Mb (64Mx8) 667MHz, on the other hand, dipped to a weekly low of USD1.50.By contrast, DDR chips maintained a more gradual price decline, where DDR 256Mb/512MB 400MHz saw a drop of roughly 3.5%. SDRAM prices remained flat, due to stable demand and supply mechanisms.
|
Amid the increasing output from DRAM makers, and the inability of downstream retailers and module houses to effectively remove their excess inventory, spot prices maintained their downward spiral. In an effort to slow down the serious DDR2 oversupply, DRAM makers are trying to form new strategies in circumventing the highly competitive DRAM market.
|
The week-long Labor holidays officially kicked off in China last week. Spot market transactions were weak in the Asia Pacific region, as retailers had already stocked up sufficient inventory. In general, the spot market price continued its downward spiral. DDR2 512Mb 667MHz dropped 4.3% to USD 2.21, while the DDR2 512Mb 667MHz eTT declined more than 6%, slipping past the USD 2 mark to USD 1.8-1.9. As people return to work in China and Hong Kong this week, it remains to be seen whether it can spur more market demand.
|
The month-end inventory pressures have caused the spot price to slip further. Amid an anticipated DRAM price rebound, various retailers and module houses have aggressively stocked up on DRAM chips. Unfortunately, the current May~June market demand does not appear to be in line with their expectations. The overly high inventory levels are thus creating a negative impact on the spot price. In addition, despite the huge DRAM price corrections that began to take place this year, chip manufacturers are still pressing ahead with their capacity expansions. Therefore, whether or not the demand can keep pace with the increasing supply will be a primary issue to monitor in 2H07.
|
The DRAM contract price slid to roughly USD 20 for 2HApr, which also affected the spot market price trend. In light of the PC selling season in 2H07, DRAM demand is expected to increase, as PC OEMs build up on their inventory. Therefore, 2H07 may represent the bottom of the current extremely low DRAM pricing levels. The persisting price declines have pushed DRAM makers to the verge of losing money. Migrating to more advanced manufacturing processes, and increasing the shipments of 1Gb chips will be two key factors in deciding how the respective DRAM makers perform in 2H07.
|
Amid sluggish market demand, DRAM spot prices continued to drop. Contract prices for 2HApr are also expected to decline further, but at a slower rate. On a different note, Intel will officially unveil the Bearlake chipsets for DTs at the end of April. The new P35 and G33 will be compatible with both the DDR2 and DDR3 memory modules. Therefore, DDR3 supportable motherboards and modules will soon begin to appear in the market in 2Q07. However, as the DDR3 512Mb chip price is still too expensive, it is expected they won't become the new mainstream standard until 2009.
|
With DRAM makers selling their chips at lower prices to remove their excess inventory, the 1HApr contract price slid to USD 22-24. The inventory clear out has gradually helped the DRAM industry bounce back to a more healthy state. Nevertheless, as the 1HApr contract price has dropped near the cost structure or even the cash cost of some DRAM makers, they are expected to incur big losses. Any additional declines may prompt some manufacturers to begin reducing their DRAM output, in an attempt to limit the price drop.
|
As DRAM inventory levels dropped to a more stable level, it triggered the DDR2eTT spot price to rebound, subsequently spurring other branded chip prices to increase as well. The DRAM spot prices appear to have finally stopped dropping. However, the DRAM contract price is still currently lower than the spot price. Thus, the contract market demand will be a very important factor in gauging whether or not the DRAM price has indeed hit the bottom.
|
|
