The DDR 32Mx8 parts were traded 2%-3% down in past week. Without an improvement in demand for spot market and contract market, the DDR SDRAM prices cannot be expected to recover soon.

Buyers are more cautious of trading in parts as they are not sure the future pricing trend. UTT prices released lower than expected on July 8, 2004 and has precipitated a weak close in Asian market at $4.45, about 10 cents down in a day, albeit, the released volume was limited.

Low density SDRAM such as SDRAM 1Mx16 and 4Mx16 continue to trade along their lows as buyers find few upside catalysts in the future. Buyers worry that production output of low density SDRAM will outpace the demand. Besides, the inventory level in IC design house is high and it takes time to be digested. Worse, the third quarter demand seems not as strong as projected.

Nand flash 1Gb price bottomed out at $12 at the end of June, rebounded to $14.3 and closed at $13.96 today. Spot market participants believe that Samsung will hold the Nand flash contract prices at the range of $13 - $14 in the third quarter and are reluctant to trade the parts with lower prices. Samsung's pricing policy will determine the Nand flash pricing trend. Since Samsung's profit margin on Nand flash parts is very good, Samsung has power to drag the prices lower to set the barrier for the coming competitors.

As 0.11um migration problems resolved in the second quarter, 0.11um is running in mass production in most DRAM makers from the third quarter. Counting 30% to 50% die output increase in 0.11um migration comparing to 0.13um and more capacity ramping up in 12" fabs, we project 16% bit growth QoQ ( Q3/Q2 ) on DRAM supply.
If demand is not as strong as expected of 15% QoQ in motherboard shipment and 20% in NB shipment, the chance may stand low for DDR 32Mx8 to go up to $5.50.

As expecting an improvement on DRAM supply from the third quarter, most PC OEMs would like to keep their inventory at current level and adjust their procurement quantity later followed the market demand. We project the 2H July contract prices remain flat or slightly higher if demand turns stronger soon.

List 1 DRAM spot prices