Market trading was sluggish last week, as manufacturers began to count their month-end inventory. In the China market, the reduction in the amount of smuggled chips from Hong Kong has caused a decrease in price queries, and a gradual decline in the spot price. The DDR2 eTT chip increased to $2.28, while branded DDR2 512Mb 64Mx8 edged down to $2.26. This shows that the short-term price upticks in the past few weeks have mostly arose from market speculation. The actual market demand does not seem to be strong enough in underpinning prices to increase further.
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The DRAM spot price continued to maintain its upward climb last week. However, after a succession of rapid price increases, the momentum has slowed down. The DDR2eTT chip jumped 9.3% to $2.23, while the DDR2 512Mb 64Mx8 leapt to $2.38, up 7.7%. Increases in the chip price are also driving up branded module prices. Samsung's DDR2 667MHz 1GB module reached to a high of $48. In contrast to a low of $31 last week, this marked a 54%increase.
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DRAMeXchange observes DRAM spot price rebound last week channels' pre stock activities amid smuggle-fighting measures in China, as well as prolonged cycle time on 70nm output.
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DRAM spot market was quite last week as most buyers attended Computex. DRAM spot price was on a mild decline, with DDR2 eTT slipping 8% to US$1.6. Branded 512Mb (64Mbx8) DDR2 price slowly eroded to US$1.8.
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Spot price went up last week on lack of new DRAM chip supply, while contract prices tumbled another 5%. It is projected that after the 2007 Taipei Computex draws to a close, prices will have a chance in experiencing a rebound. Elpida's CSO has suggested his bullish view to 2H07 and he anticipate supply may tighten in 2H07.
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Beginning from Jan07, mainstream DRAM DDR2 chip prices began to spiral downwards. Up until now, although prices have rebounded sometimes, they have occurred only three times, ranging merely between 10%-15%, and lasting for less than 10 days. According to DRAMeXchange's database, the average price of the DDR 2 tumbled 20% QoQ in 1Q07, and in 2Q07, it is expected to decline a whopping 50% QoQ. When the mainstream DDR2 512Mb 667MHz chips slipped below USD 2, it attracted many buyers to take advantage of the inexpensive chips in stocking up on their inventory. Nevertheless, amid the continuing growth in supply and the hot season not arriving yet, the increased chip buying was not sufficient enough in keeping up the DRAM prices. The market outlook of the DRAM industry has started to look gloomier. With prices already below the manufacturing costs, major DRAM makers have expressed an unwillingness to cut their prices further in clearing out their excess inventory. Current market observations show the DDR2 chip price possibly bottoming out. If this occurs, it should drive up the chip demand, and spur a rebound in the spot price.
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For last week, the spot market showed no increase in demand, as prices slipped more than 10%. Hovering between the USD1.35-1.50 level, the DDR2 512Mb (64Mx8) 667MHz eTT plunged to a low of USD1.32. DDR2 512Mb (64Mx8) 667MHz, on the other hand, dipped to a weekly low of USD1.50.By contrast, DDR chips maintained a more gradual price decline, where DDR 256Mb/512MB 400MHz saw a drop of roughly 3.5%. SDRAM prices remained flat, due to stable demand and supply mechanisms.
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Amid the increasing output from DRAM makers, and the inability of downstream retailers and module houses to effectively remove their excess inventory, spot prices maintained their downward spiral. In an effort to slow down the serious DDR2 oversupply, DRAM makers are trying to form new strategies in circumventing the highly competitive DRAM market.
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The week-long Labor holidays officially kicked off in China last week. Spot market transactions were weak in the Asia Pacific region, as retailers had already stocked up sufficient inventory. In general, the spot market price continued its downward spiral. DDR2 512Mb 667MHz dropped 4.3% to USD 2.21, while the DDR2 512Mb 667MHz eTT declined more than 6%, slipping past the USD 2 mark to USD 1.8-1.9. As people return to work in China and Hong Kong this week, it remains to be seen whether it can spur more market demand.
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The month-end inventory pressures have caused the spot price to slip further. Amid an anticipated DRAM price rebound, various retailers and module houses have aggressively stocked up on DRAM chips. Unfortunately, the current May~June market demand does not appear to be in line with their expectations. The overly high inventory levels are thus creating a negative impact on the spot price. In addition, despite the huge DRAM price corrections that began to take place this year, chip manufacturers are still pressing ahead with their capacity expansions. Therefore, whether or not the demand can keep pace with the increasing supply will be a primary issue to monitor in 2H07.
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