DDR 256Mb price - $3 is for floor; $3.5 is for ceiling.

:: Contract portion was down below 60% on Feb.

Our estimation for contract vs. spot ratio for Feb. was around 58%:42%, overall DRAM demand from PC OEMs side was mediocre due to lackluster end-demand. One reason was PC OEMs were in the process of working through inventory and were waiting for new product introduction ( like Centrino, Springdale). March contract potion is estimated to be slightly up several percent, probably can reach 65%. Even given the tepid state of demand from OEM to prepare the new models, there are still no signs for imminent end-demand picking up.

:: DRAM Makers are holding tight for prices.

Recently, DRAM makers have consensus to hold the prices tight on 1H of March. Until now, the official quotation prices are still tightening on the spot market. There was a unconfirmed/couldn't get official confirmed news about several big DRAM makers sold extra huge amount chip portions to certain DRAM module makers to release from inventory pressure and low spot potion to maintain spot prices. DRAM makers may likely raise the contract prices for 2H of March. However, as we checking the sales' revenue target for March, most of DRAM makers are still far away from their original target (less than 50%). Therefore, month end sale pressure could happen after contract prices being settled down.

:: Channel inventory volatility results in price from different areas.

The various inventory levels from different area's result in price fluctuation. Low inventory in Mainland China channels cause volatile prices performance in Asia market recently. Limitation to access to particular items (for example Hynix 32Mx8) causes the prices to trade higher in the channels. Asia channels are accumulating small amount of inventory for trading opportunity right now.

Europe, as consensus of DRAM makers to hold prices there, module sell prices seems to stop falling and probably can begin to rise a little bit. However, it's still too early to tell if the prices can hold there since other market's low prices product could flood there soon or later.

US market was affected by Iraq war issue, the prices there are getting weak as most of channels are unlikely to hold the inventory. However, the perspective could change if they suddenly think there are some prices gaps for arbitrage.

:: Perspective for this week.

Overall, our price prediction for this week is ranging from $3 to $3.5 for 256Mb DDR. The $3.5 ceiling price is due to lack strong demand. With low visibility of outlook, channels hesitate to take long-term position- once there are profits (even it is low margin) they will quickly move parts out of their inventory instead of waiting and accumulating prices to certain level. Current holding cost for most of channels is above $3. Therefore suddenly crashing in price is unlikely at this week, the floor price can stand above $3 for a short-term.