The DRAM contract price slid to roughly USD 20 for 2HApr, which also affected the spot market price trend. In light of the PC selling season in 2H07, DRAM demand is expected to increase, as PC OEMs build up on their inventory. Therefore, 2H07 may represent the bottom of the current extremely low DRAM pricing levels. The persisting price declines have pushed DRAM makers to the verge of losing money. Migrating to more advanced manufacturing processes, and increasing the shipments of 1Gb chips will be two key factors in deciding how the respective DRAM makers perform in 2H07.
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Amid sluggish market demand, DRAM spot prices continued to drop. Contract prices for 2HApr are also expected to decline further, but at a slower rate. On a different note, Intel will officially unveil the Bearlake chipsets for DTs at the end of April. The new P35 and G33 will be compatible with both the DDR2 and DDR3 memory modules. Therefore, DDR3 supportable motherboards and modules will soon begin to appear in the market in 2Q07. However, as the DDR3 512Mb chip price is still too expensive, it is expected they won't become the new mainstream standard until 2009.
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With DRAM makers selling their chips at lower prices to remove their excess inventory, the 1HApr contract price slid to USD 22-24. The inventory clear out has gradually helped the DRAM industry bounce back to a more healthy state. Nevertheless, as the 1HApr contract price has dropped near the cost structure or even the cash cost of some DRAM makers, they are expected to incur big losses. Any additional declines may prompt some manufacturers to begin reducing their DRAM output, in an attempt to limit the price drop.
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As DRAM inventory levels dropped to a more stable level, it triggered the DDR2eTT spot price to rebound, subsequently spurring other branded chip prices to increase as well. The DRAM spot prices appear to have finally stopped dropping. However, the DRAM contract price is still currently lower than the spot price. Thus, the contract market demand will be a very important factor in gauging whether or not the DRAM price has indeed hit the bottom.
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According to the latest NAND Flash pricing survey by DRAMeXchange, the contract price for the 4Gb, 8Gb, 16Gb and 32Gb MLC chips surged roughly 4%-7%. For the SLC chips, the price remained relatively the same among the various densities. This is the second contract price jump to occur for this year, where the first was recorded in 1HMar. DRAMeXchange believes the reason for the price rise can be attributed to the expected insufficient supply from upstream makers in April.
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On March 12th, Intel officially introduced to the market its Z-U130 Solid State Drive, which adopts an embedded USB interface in the PC platform.. According to Intel's website, to first test the waters, it will initially come in two low density formats: 1GB and 2GB. It expects to introduce a 4GB model in April, and a 8GB model at the end of 2007.
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As the DRAM contract price dropped more than 10% last week, the DDR2 512MB 667MHz slipped lower than the spot price of branded chips.. In the spot market, both the DDR and DDR2 declined slightly, due to sluggish market demand. In contrast to the ongoing DDR2 ramp up, demand is not keeping up with the supply. Although the demand for DDR is also weak, its price is stronger than the DDR2, as there are no increases in the output.
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For the first week after the Chinese New Year Holiday, the restocking was mostly centered on DDR chips. Demand remained weak for DDR2 chips. Although not much market transactions took place, the DDR 256Mb eTT chips were slightly up by 2.3% to USD1.79. DDR 512Mb 400MHz was up 3.2% to USD3.86. In contrast to the DDR price increase, except for the DDR2 512Mb eTT chip price, which continued its climb before the Chinese New Year to USD3.43, the remaining DDR2 512Mb 533MHz and 667MHz were all down by more than 6% to USD3.91 and USD4.03.
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On February 19th, Elpida announced it will sell the processing equipment from its 8 inch fab located in Hiroshima to SMIC's partner--Cension Semiconductor Manufacturing Corporation. The sale shows Elpida is currently trying to devote more of its efforts in improving the manufacturing process and output of its 12 inch fabs. With DDR2 800Hz set to become the new mainstream memory in 2H07, their supply may be affected if the 8 inch fabs do not successfully migrate to the 90nm process. Therefore, knowing how to effectively utilize the older 8 inch fabs will become a particularly vexing problem for DRAM makers in 2007.
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The upcoming Chinese New Year has further contributed to a weaker DRAM market, as the DDR2 spot price continued to decline. The DXI index fell from 4139 to 3998. However, in contrast to the weak DRAM market, the successful issuing of a 350 million ECB by ProMOS shows that investors are still willing to conduct long term investments in the DRAM industry.
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