:: Contract price is steadily going up

As for the contract price in July 2H, DDR256MB 333MHz has increased from 33~36 USD in the 1H of July to the current 37~39 USD. Expecting a gradually robust demand from the coming seasonality effect, OEM are disappointed at but accept the increase of contract price for a mere 8%~12%. Compared with DDR333 modules, the price premium on DDR400 modules still remains at 10~15%. However, owing to the small demand on DDR400 modules (the current shipment on DDR400 is below 15%), the contract price for DDR 400 is relatively lower than its spot price. From DRAM manufacturers’ perspectives, August contract price still has potential room for increase. We expect the price negotiation in 1H August between DRAM vendors and OEM will be similar to the pattern in July 2H.

:: DDR333 ups while DDR400 remains flat

Compared with the over-expected spot market price performance in May and June, the spot market recently reflects the real demand for DDR256Mb 400MHz. Triggered by a solid demand, the spot price for DDR256Mb 333MHz surges from 4.08 USD in early July to the current 4.97USD, or 21%. In contrast, DDR256Mb 400MHz drops from 5.09 USD to 4.96 USD, or 2.5%, in the same period. The current exceptional phenomenon of the negative price premium between DDR256Mb 333MHz and DDR 256Mb 400MHz (average price for DDR256Mb 333MHz is higher than that of DDR256Mb 400MHz) is caused by the expanding price range in DDR256Mb 400MHz. Owing to the explicit market segments in the demand for DDR400MHz, the number of suppliers to the contract market is limited and not all the manufacturers can ship DDR400 MHz modules to OEM clients. Consequently, it drives some suppliers to sell DDR400 MHz to the spot market, even lower than the spot price for some brands' DDR333MHz.

As the sales volume of chipsets supporting DDR 400 MHz raises and the price premium shrinks, we expect the current phenomenon will be eliminated and the demand will be dragged back to DDR 400MHz.

:: Same show on the stage, So-DIMM price leads DIMM

The contract price premium initially appears between DIMMs and So-DIMM. Different from the same price level in dull season, the current contract price reflects the tight supply from DRAM manufacturers. As the notebook market is getting prosperous in the second half of this year, we expect the price premium between DIMMs and So-DIMMs will continue existing.