Taiwan's Ministry of Economic Affairs has announced the establishment of Taiwan Memory Corporation (TMC). DRAMeXchange believes if the whole Taiwan DRAM vendors’capacities are taken into account, and the 5X manufacturing process is utilized, the worldwide market share of TMC will reach 34.4%.
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After the price of DDR2 1Gb eTT chip rallied over 10% since February 20th, it remained short term stable and dropped again last week (02/24-03/02), the DDR2 1Gb eTT chip price was down more than 10% from US$ 0.95 to US$ 0.85, once again fell through the mid February low US$ 0.86. About the original chips, the price drop and volatility was not as harsh as the DDR2 1Gb eTT, the DDR2 667 Mhz 1Gb chip price dropped from US$ 0.89 to US$ 0.83 with a 7% price decline.
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After Qimonda officially declared filing bankruptcy protection on January 23rd, with the Chinese New Year Holidays passing by, the DDR2 1Gb eTT chip price jumped from US$ 0.96 on February 2nd to US$ 1.2, with the upside range of 25%. But the high price only sustained for almost one week and later dropped all the way to US$ 0.87 in two weeks (2/6-2/19). Comparing to the high US$ 1.21 in February, the price plunged 28% and fell below the January DDR2 1Gb eTT average price US$ 0.98. Last Friday, the DDR2 1Gb eTT chip price once again quickly rallied and the chip price hit US$ 0.96 with a 10% price increase, and the DDR2 667Mhz 1Gb only slightly up 4.7% closing around US$ 0.89.
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Under the influence of global financial crisis, the traditional 4Q08 hot season demand was far below expectation. The NAND Flash suppliers were forced to continue their price cut strategies in order to reduce inventory and stimulate buying under the pressures of their sales performance and excess inventory.
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The DRAM market has been in oversupply situation and in cyclical downturn for almost two years. The price fell from profitable level to lower than the cash cost, and then even lower than the material cost. Since the Taiwanese DRAM vendors don’t have their own technology, often times the capacity is the stake that is to exchange for the technology with their partners. Therefore the CAPEX of the Taiwanese vendors often surpass their technology partners. Although this kind of relationship brings profit to both sides during the cyclical upturn, it is not easy to control the speed of cash outflow in the cyclical downturn and can easily trap the vendors in operating crisis.
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German DRAM vendor Qimonda declared bankruptcy one hour before the Asian market closed on January 23rd 2009. After coming back from the Lunar New Year holidays, the DDR2 1Gb spot chip price went up 25% in one single trading day and closed at its high US$ 1.2.
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The spot market trading was slow last week, DDR2 1Gb eTT slightly dropped to US$ 0.97 with a range of 4%. The DDR2 667 Mhz 1Gb remained unchanged US$ 0.85. From the market perspective, since it is close to the Chinese New Year and the New Year inventory buying momentum has come to an end, the trading volume had shrunk. The spot market might wait after the Chinese New Year holidays end to see the trading volume to go up again. In the contract market with the unchanged 1H January contract price, which DDR2 667 Mhz 1GB and 2GB average prices were US$ 8 and US$ 16, also stopped the 7 month downtrend. Recently, it is said that certain Korean vendor is willing to cut 10% to 20% capacity. The contract price bottom is becoming firm. The January contract price is hopefully to remain stable and may start a real rebound in February and March.
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The DRAM chip price has plunged since the beginning of 2007 and suffered from loss for almost seven consecutive quarters. WW DRAM vendors have lost US$ 10 billion in 2007 and 2008, and the Taiwanese vendors have lost US$ 4.2 billion. The main reasons were the optimistic view toward the memory demand and the huge 12 inch capacity expansion in 2006. The new capacity started production in 2007 consecutively resulted in severe oversupply, and has caused the DRAM price to drop quickly until now. According to the DRAMeXchange statistics, from 1Q07 to 3Q08, the WW 12 inch DRAM fabs had grown 56%, and 57% of the 8 inch Fabs had retired. The total average capacity had grown 21%. If we analyze this from another angle, along with the crashing DRAM chip price and the increasing penetration rate of Windows Vista among OEMs, even that OEM had considerably raised the DRAM content per system to over 2 GB among PCs in 2Q08, it still could not follow the speed of DRAM capacity expansion.
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The DRAM chip price has plunged since the beginning of 2007 and suffered from loss for almost seven consecutive quarters. WW DRAM vendors have lost US$ 10 billion in 2007 and 2008, and the Taiwanese vendors have lost US$ 4.2 billion. The main reasons were the optimistic view toward the memory demand and the huge 12 inch capacity expansion in 2006. The new capacity started production in 2007 consecutively resulted in severe oversupply, and has caused the DRAM price to drop quickly until now. According to the DRAMeXchange statistics, from 1Q07 to 3Q08, the WW 12 inch DRAM fabs had grown 56%, and 57% of the 8 inch Fabs had retired. The total average capacity had grown 21%. If we analyze this from another angle, along with the crashing DRAM chip price and the increasing penetration rate of Windows Vista among OEMs, even that OEM had considerably raised the DRAM content per system to over 2 GB among PCs in 2Q08, it still could not follow the speed of DRAM capacity expansion.
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In the spot market, the DDR2 1Gb eTT chip price started rallying since mid December and the has gone up from the lowest of US$ 0.59 to recent US$ 0.91, a range of 55%. The DDR2 667 Mhz 1Gb chip price also rallied from US$ 0.58 to US$ 0.77 with the range of 33%. From the market aspect, although the U.S and the European markets were closed during Christmas and New Year holidays with only Asia left to play the role, the chip price still remained steady without sharp declining. DRAM spot prices will remain in a steady uptrend. Furthermore, the spot market focused Taiwanese DRAM vendors held their shipment volume control direction unchanged since the current chip prices were still lower than their cash cost which was about US$ 1.3 to US$ 1.5. In order to keep the level of their cash in hand and the chip price, the necessity of shipment control remains.
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