DRAM pricing trend in past week ( 4/12/2005 -4/18/2005)

DRAM benchmark DDR 256Mb prices extended nearly two straight months of losses. It has dropped precipitously after Chinese new year and finally regained some stability last week following a month selloff. In past week, DRAM DDR 400/333/266 MHz were slightly down 1.65%, 1.69% and 0.42% to $2.38, $2.32 and $2.39 respectively. However, DDR2 512Mb 533MHz still dropped sharply with 12.8% loss to $6.28 in response to increasing supply and inventory pressure from DRAM makers.

DRAM supply/demand in March

According to DRAMeXchange Market Intelligence, total DRAM production output in March has increased 8.24% MoM to 509.74 million in 256Mb equivalent. DDR2 has counted nearly 21% with an output of 106.10 million in 256Mb equivalent. Although we have seen a strong growth in the shipments of Motherboard and Notebook in March and expect the content per box ( memory installed per PC system ) increase as DRAM prices plummeted. However, according to our estimate, the content per box will increase significantly until the end April or May. In March, our Market Intelligence indicated a 7.07% oversupply.

DDR2 penetration and premium in spot market

Currently, DDR2's application in spot market is estimated less than 5% of total DDR2, according to our survey to major module houses and channels. Surprisingly, we have observed a premium of a wide range from 30% to 60% on DDR2 module over DDR modules in spot market because of its low sales volume in spot market. Meanwhile, the DDR2 premium over DDR1 in contract market has closed to 5% to 10% or sometimes, even lower than DDR prices. We believe DDR2's penetration in spot market will accelerate at the second half of 2005 as DDR2 667MHz is to launch to the market and a much mature market environment involved.

NAND Flash market

For NAND Flash, the supply was insufficient, especially the density parts of 4 Gb and 2 Gb and drove the prices up 1.20% and 1.72% to $32.5 and $18.58 respectively. As for 1Gb and 8Gb, the demand has remained weak and the spot quotation has unceasingly drifted lower to USD$8.65 and USD$59.32. Overall speaking, the volatility curve has remained mostly the same as the past week.

In Samsung's Q1 result, Samsung has indicated it has essentially no inventory except for those in transit despite the increased production ramp-up and there’s a shortage situation prevailed during the first quarter due to strength in the MP3 player market.