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Spot market affects rise in 1HDec DRAM contract price

Posted: 21 Dec 2012 ?? ?Print Version ?Bookmark and Share

Keywords:DRAM? contract price? PC OEM? spot price?

According to the latest report from DRAMeXchange, although 2HNov DRAM contract prices dropped by 3.17 per cent, 1HDec module prices have gone on up as a result of the stimulation from spot prices. The research arm of TrendForce added that the 4GB ASP has risen by 1.64 per cent, returning to the $15.5 mark, while the 2GB prices climbed 1.71 per cent and reached $8.9.

From the pricing angle, the fact that prices have not plunged even with the unpromising demand situation is indicative of both the PC OEM's hard efforts to adjust inventory to healthy levels, and of the fact that buyer momentum is gradually increasing. On the supply side, DRAM makers are increasingly observed to be migrating towards the use of new manufacturing technologies. The two main Korean DRAM makers, for example, are transitioning from the 3x nm processes to the more difficult-to-handle 2x nm processes. On the other hand, Micron is gradually increasing its 3x nm production capacity, and is currently in the process of transitioning to new manufacturing technology. In the DRAM spot market, supplies of several product categories are being tightened, in effect leading to further pricing uptrend.

Given the persistent DRAM oversupply this year, the 2Gb spot prices had initially been on a downtrend, dropping to as low as $0.817 during 2HOct. During December, though, spot prices have rallied, and now exceed the previous lowest mark by 15 per cent. At the moment, spot prices remain the leading indicators of the prices in contract market. With the effects of the September production cuts beginning to take effect and assumed to continue, and with the manufacturing focal point tipping towards mobile DRAM, TrendForce predicts that the market will gradually see a demand-supply balance, and that PC DRAM's pricing downtrend will come to a temporary halt at one point.

Due to the consistent oversupply situation exhibited year after year, the DRAM industry is generally viewed unfavourably in terms of its financial prospects. While manufacturers have successfully used supply tightening strategies as a means to reduce costs, the highly aggressive nature of the market has made it difficult to generate much profit.

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