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DRAM price correction ahead, says DRAMeXchange

Posted: 14 Sep 2006 ?? ?Print Version ?Bookmark and Share

Keywords:DRAMeXchange? DRAM? NAND Flash? price?

Although the buoyant DRAM price trend persists last week, DRAMeXchange foresees risk for price correction in near term as the spot prices have been rocketed before. Contract prices, in contrast, should continue trending upward, thanks to the seasonality PC demand growth in September to October. On the other hand, after the eight-month-long price correction, prices of NAND Flash continue showing positive sign by the generally wide-acceptance of contract quotes in the first half of September.

Overall DDR2 eTT supply drop enabled distributors taking this opportunity to earn profit and resulted in the sequential price swell of 16.8 percent. The reduced supply is also a reflection of ramping up 90nm production proportion among chipmakers, which in turns lowers the output of DDR2 512Mb 64Mbx8 533MHz. Since marketers still in favor of chips with lower quotes, price of DDR2 512Mb 64Mbx8 533MHz still enjoyed price gain and closed at $6.50. Price gain of DDR2 eTT chips exceeded contract markets last week. Prices of DDR, at the meantime, were stimulated to grow slightly.

Reviewing the contract prices in 1HSept price up of DDR2 was still limited as some PC OEMs have already secured long-term supply deal with chipmakers during May to June. Prices of DDR2 512Mbyte 533MHz and 667MHz DIMMs were mostly settled in the price range of $43-45 and the difference with spot quotes are still large.

Disregard the huge price difference between the two marketplaces, DRAMeXchange doubts further growth possibility of DDR2 as our analysis model suggests that the historical pattern of price difference should fall within the range of 4 percent only. The probability for a price difference surpassing 10 percent is only 15 percent and this is rare in the historical price trend. Since the present quote for DDR2 at spot market has rocketed to as high as $7 recently, a price correction is likely to arrive soon, though the anticipated contract price growth in 2HSept should still lag behind spot trend.

The growing strong seasonality not only benefits DRAM but also SDRAM. DRAMeXchange observes that some consumer electronics makers have started pre-stocking. However, the price trend of SDRAM just remains stable rather than trending up as chipmakers have already ramped up their capacity. Closed price of SDRAM 4Mx16 was 85 cents on Sept. 11 while 8Mx16 was $1.79 and 16Mx16 stayed flat at $2.89.

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