Outlook for 1H August

Quiet month-end without major inventory adjustments by DRAM makers

This is a quiet month-end without major inventory adjustments onto the spot market by DRAM makers. There were, however, certain high volume inventory adjustments to special accounts / business partners - like module makers. Spot transaction volumes have decreased as prices have been coming down.

Outlook for 1H August contract

Marketers are expecting SDRAM contract prices to remain flat or go slightly down in 1H August as demand for SDRAM remains weak. DDR contract prices, however, are expected to rise again as DRAM makers are doing a good job of controllin allocation. Usually, the 1H of each month, shipments are less than 50% of total monthly output, therefore it is easy to tighten allocation and maintain good pricing.

Spot price outlook for 1H August

Meanwhile, spot price should not fall for DDR products, however, we probably will not see renewed hiking of prices on the spot market again as well. SDRAM spot prices are unlikely to have any major supporti - unless we see a strong boost in SDRAM demand - channels have excess SDRAM inventories that they are waiting to sell-through.

Notebook's rolling forecast still looks good for August and September

Our sources tell us that HPQ and Toshiba have doubled September's notebook rolling-forecast. This should Indicate that DDR 16x16 prices will remain high and maintain a premium with tight allocation. DDR 16x16 currently enjoys an approximate 3% premium over DDR 32Mx8.

Demand from China market probably can help

Our source indicates that China government's purchasing projects will take place at 2H of this year and focus on PC procurement. New P4+DDR models are the most likely items to experience a pick-up in demand, but regulations may limit purchases to only China brand name PCs. However, it should increase demand for DRAM.

Clone market still no clear signs of end-demand sell-through

Since late June DRAM spot prices began to rise, and demand from PC OEMs preparing for the seasonal pick-up began refilling safety inventory. However, we still have not seen clear signs of end-demand sell-through from PC end-channels and the clone market yet. Therefore, August and September's PC shipment forecasts seem a little ambitious - and we still run the long-term risk of inventory buildup.