According to DRAMeXchange’s analysis, DRAM spot & contract price fell roughly 11% and 19% respectively. Impacted by the continued low DRAM prices, branded DRAM makers’ revenues fell roughly 5.8% compared to Q407. Except Elpida and Powerchip whose revenue increased in Q108 thanks to Rexchip’s strong production ramp-up, all other DRAM makers experienced a decline in revenues. As a result, Elpida and Powerchip both saw a slight increase in market share in Q108.
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Despite transaction is not strong, DRAM spot pricing sustained a mild upward trend last week. Prices posted a surge on April 21, as evident in the 5.32% and 6.69% single-day appreciation for DDR2 1Gb 128Mx8 eTT and 512Mb 64Mx8 eTT. As magnitude of growth is rapid, sellers thus being conservative to release their stocks. After experiencing the price correction in 2HFeb, the upward price trend observed last week is the strongest single-day appreciation recently. The growth is stem from anticipation of a demand warm-up, and sellers being reluctant to sell after seeing the price correction last for that long. Such a price surge is believed to be an indicator for a possible price recovery.
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After DRAM module OEM Lih Duo forced to suspend production after reporting bounce checks, TwinMOS is also said to shutter business on April 15. While some DRAM module makers are being expelled from the industry, leading players such as Kingston and Transcend, shift to enhance profit and try their best to reduce inventory level.
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News flows were quite active last week, after a long period of silence. The major headlines are 1) CEO of Elpida said the company will raise DRAM contract price by 20% in April, 2) Samsung reportedly will have a similar move, 3) about 27-30mn of DRAM chips made by certain Korean vendor were found defective and rejected by customers. Some of the news mentioned above stimulated the DRAM spot price last week. The 1Gb DDR2 eTT chips were back to US$1.76 this Monday because the market participants were unwilling to sell down as prices were already low. Some buyers also turned aggressive as they reacted to the news.
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Major DRAM suppliers profited from their aggressive expansion in 2005 and this good fortune continued as the price of DRAM kept on going up in 2006. However, this boom did not come without consequences. This rapid growth in capacity, in addition to an over-optimistic projection on Microsoft Vista's demand for DRAM, has caused numerous industry suppliers much suffering since 2007. As those first-tier suppliers, who are finding it difficult to squeeze second-tier suppliers out, they will see intensified cost pressure. DRAMeXchange analyst, points out that some DRAM suppliers are still considering the present DRAM depression as a best opportunity to expand their market share. The DRAM market-share game is now shifting from a knockout to a marathon without a winner, and the whole business loses, according to DRAMeXchange.
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On the sideline of Nanya and Micron’s announcement of a joint venture on 50nm and below DRAM technology, Qimonda has also introduced its latest stack DRAM technology – Buried Worldline. The introduction of Buried Worldline, at the meantime, marks a farewell to trench technology on 58nm and implies that trench DRAM technology has meet its limit with sub 58nm node to all transit to stack DRAM technology.
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Amid the Lih Duo bounce check issue, financial status at memory module makers again draws attention. The entire DRAM industry (except for backend houses) is bleeding in red alongside with the aggressive DRAM expansion. Take the price of DDR2 eTT 512Mb for instance, its price has been nose dived by 88.1% from US$7 in September 13, 2006 to the current US$0.83. Under this severe price pressure, memory module makers could hardly avoid losses if they fail to ease inventory fast. Those less competitive players are forced to exit the market, while those left behind strive to strengthen their competitiveness.
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Amid Nanya and Micron’s latest JV on 50nm and below DRAM technology, DRAM industry marks a new page for vertical and horizontal integration. Recalling the DRAM industry in 1998, rapid expansion of 8-inch wafer that led to price plummet of SDRAM, has eventually resulted in a wave of consolidation among industry players. A similar scenario arrives this year when DRAM makers are aggressively boosting their 12-inch wafer capacity on one hand, and weaker-than-expected Vista impact led DRAM price drops below variable cost on the other. Without a market consensus of expansion trim, DRAM makers are likely to enhance their profitability and cost structure in a fundamental manner via consolidation.
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DRAM technology, which used to be clearly classified into stack and trench structures, is about to see fundamental change amid leading advocators’ technology development and cross partnership.
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DRAM spot prices keep heading south after seeing price of DDR2 512Mb eTT and DDR2 1Gb eTT dropped below US$1 and US$2 mark on February 13 and February 15. Price of the former dropped by 15.7% over the weak February 12-20 and closed at US$0.86, where price of the later dropped by 21.3% in the same period and closed at US$1.66.
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