Even DRAM spot prices remain in doldrums for weeks, we have mentioned some positive signs to prevent DRAM prices from falling last week. We believe that the lean inventory level in most PC OEMs and channels, a price cutting of CPUs and chipsets by Intel in late August and September and a restocking in the European market will help DRAM prices recover soon.

We have only worried the downside pressure of UTT ( untested memory chip ) parts may negatively affect the recovery of DDR SDRAM prices.

However, a sharp rise in UTT ( untested memory chips ) prices from $3.55 to $3.70 on August 17 in Asia market has swept away all negatives and pulled the DDR SDRAM 32Mx8 256Mb 400/33/266 MHz spot prices back to $4.38, $4.28 and $4.18 respectively on August 23, 2004.
On the same day, UTT prices have been up to the range of $3.95 to $3.98. Elixir DDR 256MB modules are traded at $33.5 to $34.5.

Many module houses have claimed that they have received bunches of orders for OEM modules ( non-brand modules ) since past week. Most of the channel marketers and retailers also traded in OEM modules aggressively. Some Hong Kong brokers were not prepared for the suddenly emerging demand and sold out their inventory quickly.

As we expected, European market momentum turned more active as approaching the end of August and USA market got great demand by back-to-school procurement activities. Some module houses have announced that their production lines are fully loaded now.

We observed that most PC OEMs have increased their procurement quantity at the second half of August and estimated some major PC OEMs have raised their inventory level two days more. We believe they will tend to increase procurement quantity from DRAM makers at the first half of September. Therefore, the contract prices of 256MB DDR modules are likely to keep flat or slightly rise if the spot prices continue to go up

Although we are positive for the DDR SDRAM spot upward pricing trend in the near future, we are cautious about the pricing performance and project a limited upside to DRAM spot prices as we believe the lagging demand will be offset by the increasing supply soon. We project DRAM prices will keep going upward to September and drop to $4.0 or even lower at the end of 2004.

List 1 DRAM spot prices