DDR 256Mb 32Mx8 price bottomed out

The mainstream DDR256Mb 32Mx8 400/333/266 MHz reached its bottom at $4.62, $4.72 and $4.76 respectively on May 26, 2004 and rebounded 2% to 4% until yesterday's close. Demand to accumulate inventory and restock in spot market was stimulated by a bargain offering of UTT price,$4.20 to channel distributors and modules houses by Powerchip on May 26 and as it approaching the Taipei Computex show, June 1 to June 5.

Most of the inventory built with speculative demand during upswing seemed digested and many modules houses had controlled a very low inventory-level to less than one week, therefore, they watch closely to the market momentum and pricing performance, preparing to build up their inventory near the bottom of DDR spot prices.

In past month, many market participants were in anticipation of seeing DDR prices bottom near the end of May or June and believed there's strong support at $4.50. As to be expected, the market participants regain their confidence on spot market pricing performance. It was apparent that a slight bullish bias prevailed this past week. Not only was the volume better on the up days, but so was the market breadth.

Could this rebound sustain ? How far will it go ?

We believe some catalysts will drive PC shipment to rise from June: Intel will launch 775-pin Prescott CPU with low prices and Grantsdale chipsets to support DDR2, second-tier PC OEMs in China are to restock for back-to-school demand and Taipei computex show usually bring more orders in. Even the motherboard shipment of May decreased 11% compared to that of April, we believe it's near the bottom already as most motherboard makers project 15% to 20% increase in Q3 shipment compared to Q2 shipment.

Some DRAM researchers suspect that PC OEMs may reduce memory density installed in pc systems to control their cost. According to our checks, HPQ has the highest 512MB installed ratio. Most of HPQ PCs over $550 installed 512MB. Others like IBM, Acer, eMachine and Sony have installed 512MB on PCs over $800. Dell is the one with most flexible policy, installed 512MB on PCs over $1,000. No significant signs showed PC OEMs to reduce the memory installed per system even contract prices have reached $43-$46 high level.

The contract prices of 256MB for the first half June are to remain flat, according to DRAM makers.
We project the contract prices to sustain at current level in June and may rise again in Q3 as most PC OEMs haven't reached required inventory level for hot season yet.

As for spot prices, the market momentum turned slow today since it's the beginning of month and USA is on memorial holiday. UTT was pushed to $4.43 and dropped to $4.32 in the late afternoon yesterday.
Elixir 256MB were traded $35.5 in USA market and $36.5 in Asia market. We project the spot prices for DDR 256Mb 32Mx8 to drift at narrow range of $4.7 for 266MHz to $5.0 for 400MHz before mid-June due to lacking momentum to push the prices up to $5.5 again. We expect the spot prices recover to $5.50 in Q3 as demand getting stronger and supply remaining tight then.