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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Sluggish market demand and increased supply from DRAM makers sent the DDR 2 spot price lower, where the DXI index slipped from 4262 to 4139. The price difference in the spot and contract markets has begun to grow smaller in 1HFeb. The average price stands roughly at US $43.
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A weak market demand, coupled by an increased DRAM supply, further drove down the DDR2 spot price, where the DXI index plunged from 4363 to 4262. On a different note, DRAM makers have subsequently released their earnings result for Q406. Manufacturers that owned a higher ratio of the more cost effective 12 inch fabs evidently performed better. Thus, for players that largely operate 8 inch fabs, it is expected that they will be faced with a tougher year ahead.
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A weak market demand drove down the DDR2 spot price for last week, where the DXI index slid from 4549 to 4363. As price negotiations between some of the DRAM and PC OEM makers are conducted on a monthly basis now, the DDR2 contract price drop in 2HJan was still within 3%. It is anticipated that a more evident price decline will be witnessed after February.
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The sluggish DDR and DDR2 spot markets caused the DXI to slip from 4600 to the 4549 level. However, amid production cuts from DRAM makers and demand from the PC clone market, future DDR price drops should be limited. For DDR2, the PC market's weak seasonality drove down its market demand. To boost its growth, relevant component prices need to be cut further.
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Amid plunging DDR spot prices, DDR chip procurement has become more evident. On the other hand, DDR2 demand remains sluggish, as seen in the DXI decline from 4622 to 4612. Minimal changes are seen in the DDR2 contract price for 1HJan. The future DRAM price trend is expected to depend a great deal on how the market reacts to the upcoming Vista release.
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Inventory checking and communication disruptions caused by an earthquake last week, significantly decreased the Spot market transactions. A Weak Spot Price was reflected by the DXI, where it decreased from 4633 to the 4631 level. As for the DRAM forecast in 2007, game console are expected to be the next driving force of the DRAM industry.
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Due to the approaching Christmas holidays, module vendors and brokers are adopting a wait and see attitude. Minimal transaction volume has resulted in the DRAM spot price to grow weaker, where the DXI lost 11 points, declining from 4644 to 4633. The DRAM contract price remained relatively the same in 2HDec, as several PC OEM makers have been experiencing better than expected sales.
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