DDRs and SDRAMs are in downward tendency

 

A dramatically down on 1H December contract prices didn't have an immediate and negative impact on the pricing performance of DDRs / SDRAM in the spot market last week. However, as we projected, a continuing downtrend on DDRs from the beginning of November has had signaled a cyclical downward tendency and some uncertain rush orders may push and support the pricing level staying up or stable for a few days but we wouldn't expect these short-term strength as rebounding signals. We observed that since the early November, the upturn momentum for DDRs only lasted for 3 to 5 days. As we estimated, the flown-in demand for DDRs last week only lasted for 3 days and the market turned slow and back to the downward trend as the orders from Europe and China shank. The major marketers in spot market including channel distributors/ modules houses / traders are more cautious about their inventory levels and mostly pessimistic for the market direction. The market is paying an attention to the next movement of PC OEMs and DRAM makers whose policy on adjustment their inventory levels will have big impact on the % of  further downside. Positively, we don't expect a dramatically dip on DDRs / SDRAMs 'spot prices to the mid of December base on our anticipation of low chance of heavy dumping pressure from DRAM makers. However, the chance of dumping pressure gets higher as approaching to the end of December and if the heavy dumping really happens, the prices of DDR 256Mb may plunge to $3.5 or lower subject to the selling pressure of the DRAM makers.

 

 

DDR 256Mb 32Mx8 Contract prices V.S. Spot prices

 

The contract price for 1H December DDR 400 MHz is ranging $4.25 to $4.50 and spot prices are about $3.90 to $4.10. The premium between DDR 256Mb 32Mx8 contract and spot prices is shrinking from the maximum of $0.90 on October 14 2003 to $0.38 of today. We'd like to mention that the contract prices of DDR 400MHz has remained at high around $4.95 to $5.16 for over three months from the beginning of August to the mid-November even though the spot prices has been heading down dramatically. Contributing to the DRAM makers being capable to remain the high contract prices despite the downward pressure from spot market was the supporting demand on hot season from PC OEMs. However, as it passed the peak time of October, OEMs start to adjust down their inventory levels and hold stronger negotiation power toward DRAM makers, the contract prices are getting down close to the spot prices and narrows the premium to $0.38 of today. We project a slightly down of 2% - 3% on 2H December contract prices since the pricing trend is heading down and there's still room for contract prices to go down as the selling pressure exists among DRAM makers.