:: Robust contract price uptrend in line with market expectation

In line with market expectation, contract price for the first half of August successfully surged again. Mainstream items, such as DDR 256Mb 266/333MHz, increased from USD 4.4~4.8 in the second half of July to USD 4.82~5.2, a rise of 9~10%. It reflects OEM's optimistic prospect toward a continuous and stable shipment in the third quarter. On the other hand, in order to make up the loss from the first half of 2003, DRAM manufacturers are aggressively to boost its profitability, one of the factors to drive price up. Hence, we anticipate a price surge is foreseeable in the short term. However, owing to a low demand on DDR 400Mhz, the price increase for DDR 256Mb 400Mhz is not obvious. In addition, the remaining inventory procured by OEMs in June and July is still sufficient for current demand. As a consequence, the current contract price for DDR 400MHz is bolstered by that of DDR 333MHz. As the mainstream demand is switched to DDR 400MHz (Intel plans to launch single channel chipset,848, in the middle August), the room for DRAM price surge will appear.

:: Positive signal-spot price crosses over contract price

The current DDR 256Mb 266MHz spot price has finally surpassed its contract price; and an earlier crossover appearing in DDR 256Mb 333MHz also indicated an uptrend DRAM market. Comparing with the historical pattern of a 6~8% price premium between spot price and contract price in an uptrend, the current price premium between DDR 256Mb 333MHz spot price and contract price stands at 7%. We foresee the price premium will sustain the current uptrend status, driven by the rally from spot price, until the spot price re-cross over the contract price and a negative premium appears.