According to DRAMeXchange’s survey with DRAM makers and PC OEMs, 1H Apr. DRAM contract prices will still remain flat.
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Battered by the DRAM downturn over the past two years, most DRAM makers are facing cash sufficiency problems and may default payment due in the short term. Therefore, DRAMeXchange believes some DRAM makers will be forced to maintain low utilization rates of under 50% by end of 2009, resulting in the 2009 DRAM supply bit growth to be only 2.43%, compared to 95% in 2007 and 66% in 2008, says DRAMeXchange.
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The NAND Flash contract price hit bottom at the end of 2008 and started to rebound. Taking the main stream 16 Gb and 32 Gb chips for example, the 16 Gb contract chip price was US$ 1.65 in 1H December 2008 and reached US$ 3.15 in 1H March 2009, with a 91% increase. The 32 Gb contract chip price also rebounded from US$ 3.62 in 1H December 2008 to US$ 5.98 in 2H March 2009, increased at 65%. To the NAND Flash vendors, both upstream and downstream, such rapid price change implied certain marketing strategic adjustment.
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After Windows Vista, Microsoft plans to launch its new operating system Windows 7 with six editions (Figure-1) to meet different market segment demand at the end of 3Q09. Inheriting most of the functions of Windows Vista, Windows 7 can be viewed as the improved version of Windows Vista and revised the commonly complained shortcomings of Vista. Meanwhile, the system requirement of Windows 7 is quite similar to the requirement of Windows Vista in order to avoid the promoting limitation which occurred to Windows Vista.
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The current NAND Flash price rally that started from the end of last year stemmed from the NAND Flash vendors decision to halt their 8 inch production and lower their 12 inch utilization rate. Amid the continuing supply decrease, the major NAND Flash chip 16 Gb MLC average contract price rose by 91% in the past three months, as shown in Figure-1. The current price rally eased the upstream vendors operating losses and provided sufficient fund for the fabs to continue manufacturing. The downstream memory card and UFD vendors also indirectly benefited from the current price uptrend. After gradually clearing the inventory of NAND Flash chips and memory cards purchased with lower cost previously, the vendors’ revenue of the past two months increased remarkably.
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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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