Spot market: Mainstream DDR 400 MHz enjoys relatively stable price

DXI went down by 1% (or 32 points) to 2,935 on October 25 from 2,967 on October 18, 2005, which indicates the lukewarm demand amid continual price drops at the spot market. Noted that price of 256Mb (32Mbx8) DDR 400 MHz was able to counter the drop and tended more stable as memory makers most focus on 512Mb DDR2 production.

Spot price of mainstream 256Mb (32Mbx8) DDR 400MHz maintained at US$2.51 while the same-density efficiently tested (eTT) DDR rebounded from US$2.13 to US$2.15 over the week October 18-25. Price of high-density 512Mb (64Mbx8) 400 MHz, however, was reduced from US$5.38 to US$5.27 while the same-density DDR2 533 MHz was also slashed from US$4.93 to US$4.73.

Contract market: Price gaps between DDR and DDR2 enlarged but should narrow down after November

Contract prices in 2HOct all trended down with DDR2 price dropped the most, thus posed negative side effect over DDR pricings:

1.Contract price for 256MB DDR UDIMM (for desktop) and 256MB DDR SO-DIMM (for notebook) both dropped by 4% and stayed at US$21.1, no price premium exist between these two modules.

2.Price difference between 512MB DDR and DDR2 SO-DIMM has enlarged from 5% to 9% in the previous week, which makes the same-density DDR SO-DIMM enjoying a US$4 higher quote than DDR2 SO-DIMM.

3.Contract price of 512MB DDR2 was still below the same-density DDR and we observe that the price difference had enlarged from 3.5% to 6% over the previous week. Noted that the escalating output for 512Mb (64Mbx8) DDR2 chips continues to drag related price down. One single 512MB DDR2 module even comes with lower price than two 256MB DDR module.

Despite PC shipments picked up during the tradition hot season during September and October, DRAM market is still under the oversupply shadow with sluggish DDR2 demand limiting overall contract price growth. DRAMeXchange estimates that global DRAM bit growth should grow by 5-7% on month in October amid ramping up 12-inch wafer output. Leading memory makers at Korea, Japan, Germany, most report DDR2 proportion hitting 50% , which should accelerate DDR2's output ratio to overall DRAM output escalate in October.

For the demand side, the momentum over demand upon the previous back-to-school demand and week-long holiday in China was not as strong as expected. As the PC shipment enjoy higher growth in 1H05 and the high crude oil price pressure exists, demand for DRAM in 2H05 should be limited.

Memory makes could hardly count on DDR2 on potential demand uptick. As discussed in our previous analysis reports, the tight Intel DDR2 supported chipset supply has now slow down PC OEM's pace over DDR2 transition. Present DDR2 inventory is as high as 6-week's with reference to our channel checkings, which is much higher than the standard 3-week.

Despite the price difference between 512 Mb DDR and DDR2 enlarged, we expect the difference should narrow down after November along with memory makers' continue adjustment over DDR2 output.

Taking the component shortage into account, DRAMeXchange estimates that NB and MB shipment should grow by 13% and 9% QoQ in 4Q05 respectively.