Less fluctuation in the spot market this week.

New flows are creating more uncertainty in the market.

Beginning with Elpida and Mitsubishi and Powerchip; next was the relationship from Infineon and ProMos and Mosel. Last week was a dramatic week for the DRAM industry, in fact, the consolidation in the DRAM industry will most likely take more time for these relationships to be resolved. It should not change the supply/demand situation in the near-term, however, it does effect psychologically - making marketers to take a more short-term conservative strategy as potential results of uncertainty in these relationships may cause an unusual supply increase in spot market. Marketers would like to wait longer for a more clear resolution of these relationships rather than taking too much inventory.

Inventory checking

DRAM makers have very low inventory in DDR parts; we estimate the inventory level is within 2 days to one week - therefore they can still maintain contract prices. SDRAM inventory is comparative higher, some DRAM companies still hold over 1 month with little real demand to digest it.

Module maker's DDR inventory is also within a reasonable level of one month. SDRAM inventory is also comparative high at some module makers.

Distributors have within 1 week of DDR inventory and some have over 2 weeks of SDRAM inventory.

Trader Channels almost have no DDR inventories right now. SDRAM inventories are hidden in some channels and are not easy to clean up without an increase in SDRAM demand.

Overall, the entire industry average inventory level for DDR is 2 to 3 weeks and over 1.5 month for SDRAM.

SDRAM inventory is waiting to cleaned up.

Worldwide there is more than 1.5 month SDRAM inventory which are waiting for the last chance to clean up. Intel began to play clean up of all old chipsets which support SDRAM models; Motherboard companies are also willing to support promotions to clean up their SDRAM motherboard models. SDRAM inventory has this chance to sell a big amount out during this promotion plan. Otherwise it has to be gradually digested from the upgrade market.

Spot prices will perform less fluctuation this week.

Although DDR spot prices remain strong with a gradually warming up clone demand, but price can't go straight up due to uncertainty of how long demand can be sustained. We expect DDR prices will just trade near current price levels for this week. SDRAM prices have no hope to rise under current conditions.

Contract prices stable for this month.

Contract prices for DDR can hold steady in the range of $55~$58 for 256MB which remain within $6.5 to $7 for 256Mb. SDRAM contract prices for 128Mb seems not much room to decline, but 256Mb still has not touched the bottom yet.