Despite most memory makers have transited production from DDR to DDR2, overall DDR2 supply is still outpacing demand. DRAMeXchange estimates that such situation should only swing until 1Q06 upon aggressive deployments from the two chip giants, Intel and AMD.

With the launch of 945P/G chipsets in 2Q05, the ratio of motherboard that adopted DDR2 has grown to 10% of overall shipment and the entry-level 945PL supported motherboards are also ready on shelf. AMD, which holds almost 50% market share at distribution channels has also started sampling the first batch of DDR2 supported CPUs to motherboard makers recently. Actual shipment should be available ahead of schedule in 1Q06, rather than the initial expected 1H06.

The launch of Apple's iPod nano undoubtedly further boosts NAND Flash demand. High-density NAND Flash memory chips supply is again falling short of demand at the spot market. Not only the prices of high-density Flash chips escalate, the low-density ones also see side benefits as well. Noted that suppliers are aware about the price rally and release their stock at the market for better margins.

However, the shortage of IC substrate that suppose to hinder iPod nano's shipment may help easing the tight supply of high-density Flash. Two main components that packed under BGA (ball grid array) are the SST made Flash controller and the PortalPlayer made MP3 processor. These players try to secure BGA substrates with higher quotes. The success of securing substrate should affect iPod nano's Christmas shipment. If their attempts fail, we believe that shortage of high-density Flash will aggregate but help dragging related prices down.