In past week, eTT(UTT) parts have been the most influential sector catching a bid, surged nearly 13% from the range of $1.91 to $1.93 on April 19 to the range of $2.15 to $2.18 on April 25. During the same duration, DRAM benchmark DDR 256Mb 32Mx8 400/333/266 MHz have lifted only 1.74%, 2.1% and 0.4% from $2.34, $2.30,$2.39 to $2.39, $2,34 and $2.40 respectively.

The surging demand on eTT parts were driven by Chinese market, followed by major module houses and marketers in Taiwan and Hong Kong. Some sources indicated that the strong buying interest on eTT parts were stimulated by hearing that one major module house has a bulk buying of eTT parts and may lead to a tight supply of eTT parts soon.

DDR prices to rebound soon?

Despite seeing falling DRAM contract prices in the first half of April, we've observed that most marketers have turned positive view toward DRAM DDR 256Mb contract and spot pricing trend for the following reasons:

First, there will be more capacity allocated to Nand flash if DRAM prices drop further. Sources indicated that Samsung and Hynix have plans to allocate more DRAM capacity to Nand flash. The allocation schedule and quantity will be adjusted by market situation.

Second, DDR2 penetration is to increase as DDR2's price premium over DDR has shank to 5% and will soon diminish. Currently, DDR2 production output only takes around 20% to 25% of total DRAM output and expects to increase to 40% in the second quarter. Mass production on DDR2 and high density products is likely to suppress the DRAM supply bit growth due to lower yield rate on DDR2 and tight DDR2 backend capacity.

Third, we believe the downside of DRAM DDR is limited and some PC OEMs will plan to increase their inventory level for an increasing content per box – memory installed per PC system, and prepare for the coming back to school demand. Seasonally, PC OEMs will increase their inventory level near the end of the second quarter from a minimum of two weeks to four weeks or a maximum of six weeks as approaching the hot selling season, the third quarter. However, the timing will be earlier or later depending on DRAM pricing trend and projecting demand.

Nand flash market update

For NAND Flash, the spot prices of mainstreamed chips have slipped down slightly. The prices of 1Gb/2Gb/4Gb and 8Gb were traded at $59.32, $32.05, $18.9 and $8.57 on April 19 and were down to $59.23, $31.8, $18.9 and $8.46 respectively in late Asian market on April 25. Currently, we have seen limited transactions in the spot market due to insufficient supply and flattish demand.