Elpida quandary boosts DRAM contract price
Keywords:DRAM? contract price? DDR3 module?
As for the spot market, in contrast to continually rising contract price, from the day Elpida filed for bankruptcy protection to the present, DDR3 2Gb 1333Mhz ASP has fluctuated about $1 due to sluggish demand, relatively weak buying momentum and generally low trade volume. This is a result of the fact that Elpida's supply to the spot market has not decreased significantly, as well as the gradual decline of the spot market, which in past years easily had 20-30 percent market share, but accounts for only 13 percent of the DRAM market today. TrendForce said it is highly likely contract price will continue to rise in April, although it will still depend on third-place revenue holder Elpida's next move. All of the above factors will influence the future DRAM price trend.
Facing a post-Elpida era, it is optimal timing for DRAM industry mergers and acquisitions. TrendForce noted that Korean manufacturers' combined market share has reached nearly 70 percent of the global DRAM industry, leaving only 30 percent for Taiwan, U.S., and Japanese DRAM makers. The non-Korean makers are unable to compete in terms of economies of scale, technology migration speed and product mixtheir losses will only increase, added the research division.
Taiwan-U.S.-Japan DRAM alliance as the only solution
Since mid-2011, Taiwan DRAM makers have been continually decreasing commodity DRAM capacitycurrently ProMOS is only manufacturing 10K of non-commodity DRAM products and Powerchip has become a dedicated foundry. For Elpida, it is looking like a merger or acquisition is unavoidable. Looking at DRAM industry competition, TrendForce believes a Taiwan-U.S.-Japan alliance is the only way the makers would be able to go up against the Korean manufacturers. If Taiwan makers are able to maintain timely mass production and economies of scale for wafer starts, in addition to good yield rates and technology migration support, they could bear the heavy burden of reducing cost.
As for U.S. makers, not only are they on good terms with PC OEMs, their server DRAM market share is satisfactory, and they could combine their flash products with mobile DRAM to make headway on the smartphone and tablet markets. Japanese makers are not far behind their Korean counterparts in terms of commodity and mobile DRAM yield rate and technology migration. If they move more production to Taiwan manufacturers and cooperate with U.S. makers on MCP production to target the mobile device market, cost management and profitability will improve. If the tri-national alliance is successful, their total capacity would be about 410K, 34 percent of global DRAM capacity, and the DRAM industry would be composed of three equally strong contenders.
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