Contract prices remain flat while spot prices face downward pressure.

:: Asia market weak.

In China, while the May 1 holiday has passed, overall market sentiment remains weak. The IC channel and module makers are turning more conservative compared with before the holiday as the impact from SARS mounts. The closure of IT marketplaces has interrupted the supply chain and has increased concern about building stock at distributors. This has led to stock being sold at lower prices that has depressed the module market as a whole. Even non-branded chip and white-box module trading are slowing down. The situation in China has depressed DRAM trading in Hong Kong and Singapore while Taiwanese traders are targeting the US and Europe markets. In Japan, DRAM trading has been regular, but no surprise increases in volume have appeared to cheer up the market.

:: US and Europe market stable

Trading in the US market has been more active after the US-Iraq war. The module business has stabilized with a focus on 333 and 400MHz high-speed modules. Presumably, some orders related to the upcoming launch of the Intel 865 chipset remain unfulfilled. The Europe market is just warming up, but at a very slow pace. Overall, vendors in the US and Europe most likely stocked up on inventory before punitive duties were slapped on imports from Hynix Semiconductor. With ample supply, no price premium exists between the Asian and Western markets.

:: Contract prices remain flat

Despite weak PC end-user demand, first-tier OEMs continue to source DRAM from the contract market in line with their forecasts. Demand for SO-DIMM notebook-use DRAM has been relatively stronger than demand for desktop DIMMs. Contract prices have remained stable recently despite falling spot prices. This looks set to continue into the second half of May. Without an accurate idea of quantities sold through to end-users, concern is mounting about inventory build-up in the channel.

:: Spot prices struggling to remian above US$3

Although the major DRAM makers are trying to keep chip prices at or above US$3, the IC channel and module makers do not believe this price point can be maintained beyond mid-May. As pressure continues to rise on DRAM makers to ship before month-end and demand continues to weaken, everything points to price erosion, not stability. Without any good news, the market will continue to look bleak.