Little changed since the last update as the DRAM benchmark DDR 256Mb 32Mbx8 continue to vacillate in roughly the same ranges.. DDR 256Mb 32Mbx8 400/333/266 MHz were traded down 2.6%, 0.8%, 0% from $2.31, $2.33, $2.39 on May 17 to $2.25,$2.33 and $2.39 in early Asian market on May 24 respectively. During the same period, SDRAM 32Mbx8 and 16Mbx8 were traded from $4.14 to $4.16 and $3.64 to $3.63. Low density SDRAM 4Mbx16 and 1Mbx16 has remained unchanged at $0.45 and $1.00. eTT(UTT) parts were traded in a narrow range of $2.02 to $2.07 in past week.

DDR 256MB contract prices bottomed out in the second half of May

Though most PC OEMs still requested 5% further down on 256MB UDIMM prices, DRAM makers have been reluctant to settle the prices below $20 as some buyers have increased the procurement quantity up 20% to 30%, besides, $2.25 in terms of 256Mb chip price is below most DRAM makers' cost already. We believe the DDR 256MB contract prices have reached near bottom in the short term and DRAM prices may trend up in line with seasonality demand. However, we have not seen shortage concern for DRAM supply in the near future, we don't expect DRAM prices to rebound sharply as V shape in pricing curve. We have forecast DDR 256Mb 32Mb average price slowly up toward $3 near the end of the third quarter.

12" capacity ramp up in DRAM/NAND flash

According to DRAMeXchange market intelligence, we have estimated the total of worldwide 12 inch fab capacity ramp up from 246K per month in the first quarter to 408K per month till the fourth quarter. Samsung will increase the capacity in fab 12, fab13 and fab14.: Fab 12 is producing DRAM and NAND flash, Fab 13 is producing mostly in DRAM and Fab 14 will be producing in NAND flash according to the plan. Inotera, the joint venture of Infineon and Nanya tech will reach full capacity of 54K per month in October 2005 and may expand to 62K till the end of 2005. Powerchip's 12" capacity will allocate up to 10K to AG-AND flash to Renesas and it plans to produce Data flash in its future third 12" fab, 12C which will be ground breaking in the fourth quarter of 2005.

DRAM capacity switch to NAND flash

According to Samsung's Q1 conference call, its NAND flash capacity is about 700K/quarter in the first quarter of 2005 and will reach around 800K at the fourth quarter of 2005. Hynix is an aggressive follower in NAND flash market. It has switched over 50K DRAM capacity to NAND flash since early 2004 and may allocate another 50K to NAND flash depending on market situation. Currently, Hynix is on progress of mass production 4Gb NAND flash. Infineon and Micron have slower penetration in NAND flash market, currently, their NAND flash wafer in is less than 10K per month.

As DRAM prices dropped below cost, we believe most DRAM makers will allocate more capacity to NAND flash for higher profitability, therefore, the DRAM bit supply growth will be constrained at the end of 2005.