Despite DRAM makers cut their capex by 40% YoY in FY08 after suffering losses from 2Q07, DRAM supply bit growth is still expected to grow by ~65% YoY, primarily driven by aggressive expansion at Samsung and Elpida. Thanks to a steep price cut, memory content per box is also expected to have a big boost. But when over half of the shipped PCs come with 2GB or above memory density, magnitude of growth in terms of memory density will slow down.
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In the week August 12-18, price of 1Gb eTT DDR2 has dropped by 1.7% from NT$1.79 to US$1.76, whereas price of 512Mb DDR2 eTT has also felt by 3.7% from US$0.81 to US$0.78. Price drop was relatively mild in the branded segment. Price of branded 1Gb DDR2 667 was flat at US$1.86 and price of 512Mb DDR2 667 was down 2.4% from US$0.85 to US$0.83.
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While DRAM industry posted a record YoY bit growth in FY07, corresponding A&T (assembling and testing) houses were subjected to stiff challenges as a good elasticity on both pricing and production is required.
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DRAM spot pricing has been under correction pressure and consolidating since early July. DRAM supply was sufficient in July. But as demand side senses that supply growth may slow down, a rebound of DDR2 eTT 1Gb price took place and once hit US$1.84 on August 1, close to the highest price in mid July. Yet, the upward momentum did not sustain as transaction was suppressed by the relatively high inventory at module houses, agents and speculators.
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DRAM spot pricing sustained its stable trend last week with limited fluctuation recorded. During the week July 22-28, DRAMeXchange records that price of 512Mb eTT was stabilized at US$0.86. Price of 1Gb eTT has appreciated by 1.1% from US$1.80 to US$1.82. In the branded segment, price drops of both 512Mb and 1Gb parts are kept at ~1% range, with the former closed at US$0.94 and the later at US$1.94.
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DRAM contract price showed signs of bottoming out in April, with a strong rebound soon followed in May. Price of 1GB part has surged by 30% from US$17.50 in April to US$22 in July. Spot price of the same-density 667MHz part, however, has dipped by approximately 9% from US$2.16 to US$1.97 in the same period.
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DRAM transaction and pricing were being discouraged after price of DDR2 eTT (both 512Mb and 1Gb) posted a sharp decline during July 7-11. DRAMeXchange records that prices of 512Mb and 1Gb have been dropped by 6.2% and 5.6%, respectively, during July 1-15. In the branded segment, prices of 512Mb 667MHz and 1Gb have been also dropped by 2.9% and 5.9%, respectively, in the same period.
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In the DRAM industry, traditional ArF dry lithography equipment is still the mainstream fabrication tool, with its physical limit being identified at 65nm. This implies that for any design geometry that is smaller than 65nm, shift to immersion tool is necessary. (Note: Immersion tool utilizes water to replace air as media in between lithography lens and wafer surface for circuitry patterning. Since water delivers a higher refraction rate, smaller linewidth resulted thus breaks physical limit.) Vast capex required for process node advancement, especially procurement of expensive immersion tool, is a big challenge for those DRAM makers who are still bleeding in red.
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A low transaction volume during seasonal downturn is normal, but a divergent price trend in two market places is indeed rare. spot price of eTT 1Gb dropped by 8.4% in two weeks’ time, down from the high-level US$2.15 in mid June to US$1.97 on June 30. A divergent price trend is observed in DRAM contract and spot market. While DRAM contract price is trending up steadily amid tight supply, the downward spot price trend only reverse to a flat trend last week after experienced consecutive drops since mid June.
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A dismal DRAM spot price is observed last week due to: 1, PC shipments likely to fail expectation in 2Q; 2, flurry of speculations about possible circulation of defective Samsung chips at spot market. Magnitude of price drop was relatively sharp at 5%, with price of DDR2 eTT 1Gb once dropped below US$2.
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