The weak memory contract pricings constrained DRAM spot pricings growth over the week September 20-27, yet traders were still striving to hold the pricings at reasonable level in order to meet the potential demand upbeat for the coming holiday in China.

Spot price of DDR 256Mb 32x8 400MHz grew by a slight 0.78% at US$2.58 on September 27 while the same architecture and megahertz 512Mb DDR price dropped by 1.05% at US$5.65. DDR2 512Mb 533Mhz and efficiently tested (eTT) DDR both stayed flat over the same timeframe.

The elimination of demand boosts that driven by the back-to-school demand in 1HSept dragged contract prices down in 2HSept. Both 256Mb and 512Mb DDR contract prices trend down with an approximate of 3% while 512Mb DDR2 price was even dropped by 5%. Despite the long holidays in China is about to come, traders are reluctant to restock inventory, leading the contract pricings in lack of growing ingredients.

In addition to the weak contract pricings, memory makers who tried to polish their financial records during late 3Q had also led to increase of memory supply at the market, thus placing more pressure on pricings.

DRAM pricings are unlikely to gain any momentum in near-term with reference to leading players' production roadmaps. Continue ramp of capacities from players including ProMOS, Powerchip, etc. boost supply, but place more pressure on pricings at the meantime. Christmas is now the only period that left for driving another wave of potential demand.

For the NAND Flash segment, we believe that high-density Flash prices should continue to escalate but low-density parts should under price drops pressures upon Samsung's aggressive move of growing market share. Apple's iPod nano will still serve as the price trend indicator for high-density Flash over the coming months. Recent rumors suggested that rival Hynix will start producing its first 8Gb (4Gbx2) NAND Flash from October and we expect to see 4Gb Flash supply being exposed under the potential shortage concern.

8Gb NAND Flash lead the price growth over last week by 6.35% and was closed at US$50.05 on September 27. 4Gb price also grew by a slight 1.11% at US$23.64 but both 2Gb and 1Gb prices trended down by 3.74% and 0.14% respectively.

Tracking the latest NAND Flash contract price update, both 4Gb and 8Gb prices rebounded, of which 4Gb enjoyed the first-time growth of 3% after a seven consecutive months' drop. We believe that Apple's iPod nano is the chief price growth driver for high-density parts as supply is lagging demand. Prices for low-density parts (1Gb and 2Gb), however, stayed flat upon the new comer's arrival (Micron).