According to the latest NAND Flash pricing survey by DRAMeXchange, the contract price for the 4Gb, 8Gb, 16Gb and 32Gb MLC chips surged roughly 4%-7%. For the SLC chips, the price remained relatively the same among the various densities. This is the second contract price jump to occur for this year, where the first was recorded in 1HMar. DRAMeXchange believes the reason for the price rise can be attributed to the expected insufficient supply from upstream makers in April.
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On March 12th, Intel officially introduced to the market its Z-U130 Solid State Drive, which adopts an embedded USB interface in the PC platform.. According to Intel's website, to first test the waters, it will initially come in two low density formats: 1GB and 2GB. It expects to introduce a 4GB model in April, and a 8GB model at the end of 2007.
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As the DRAM contract price dropped more than 10% last week, the DDR2 512MB 667MHz slipped lower than the spot price of branded chips.. In the spot market, both the DDR and DDR2 declined slightly, due to sluggish market demand. In contrast to the ongoing DDR2 ramp up, demand is not keeping up with the supply. Although the demand for DDR is also weak, its price is stronger than the DDR2, as there are no increases in the output.
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For the first week after the Chinese New Year Holiday, the restocking was mostly centered on DDR chips. Demand remained weak for DDR2 chips. Although not much market transactions took place, the DDR 256Mb eTT chips were slightly up by 2.3% to USD1.79. DDR 512Mb 400MHz was up 3.2% to USD3.86. In contrast to the DDR price increase, except for the DDR2 512Mb eTT chip price, which continued its climb before the Chinese New Year to USD3.43, the remaining DDR2 512Mb 533MHz and 667MHz were all down by more than 6% to USD3.91 and USD4.03.
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On February 19th, Elpida announced it will sell the processing equipment from its 8 inch fab located in Hiroshima to SMIC's partner--Cension Semiconductor Manufacturing Corporation. The sale shows Elpida is currently trying to devote more of its efforts in improving the manufacturing process and output of its 12 inch fabs. With DDR2 800Hz set to become the new mainstream memory in 2H07, their supply may be affected if the 8 inch fabs do not successfully migrate to the 90nm process. Therefore, knowing how to effectively utilize the older 8 inch fabs will become a particularly vexing problem for DRAM makers in 2007.
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The upcoming Chinese New Year has further contributed to a weaker DRAM market, as the DDR2 spot price continued to decline. The DXI index fell from 4139 to 3998. However, in contrast to the weak DRAM market, the successful issuing of a 350 million ECB by ProMOS shows that investors are still willing to conduct long term investments in the DRAM industry.
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Sluggish market demand and increased supply from DRAM makers sent the DDR 2 spot price lower, where the DXI index slipped from 4262 to 4139. The price difference in the spot and contract markets has begun to grow smaller in 1HFeb. The average price stands roughly at US $43.
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A weak market demand, coupled by an increased DRAM supply, further drove down the DDR2 spot price, where the DXI index plunged from 4363 to 4262. On a different note, DRAM makers have subsequently released their earnings result for Q406. Manufacturers that owned a higher ratio of the more cost effective 12 inch fabs evidently performed better. Thus, for players that largely operate 8 inch fabs, it is expected that they will be faced with a tougher year ahead.
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A weak market demand drove down the DDR2 spot price for last week, where the DXI index slid from 4549 to 4363. As price negotiations between some of the DRAM and PC OEM makers are conducted on a monthly basis now, the DDR2 contract price drop in 2HJan was still within 3%. It is anticipated that a more evident price decline will be witnessed after February.
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The sluggish DDR and DDR2 spot markets caused the DXI to slip from 4600 to the 4549 level. However, amid production cuts from DRAM makers and demand from the PC clone market, future DDR price drops should be limited. For DDR2, the PC market's weak seasonality drove down its market demand. To boost its growth, relevant component prices need to be cut further.
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