Jan. 10, 2006 -Marketers rushed to source for available DRAM at the spot market after realizing supply grows tighter after the previous holidays. Mainstream DRAM prices all rebounded over the week Jan3-9 with the briskly demand mostly driven by the DDR2 demand growth from PC OEMs at the contract market, as well as the DDR2 output drop that followed capacity reshuffle during the previous months.

Spot price trend of NAND Flash chips also showed stabilizing signs, followed the drops for all mainstream parts in the first week of January. We records low-density NAND Flash price drops narrowed down or even report growth last week, versus to the first week's widespread drop.

Spot market reports perky price growth at a minimum of 10%

Among all mainstream DRAM parts, DDR2 512Mb 64Mbx8 enjoyed the largest growth at 17% (US$3.75 to US$4.39) with the growth of DDR 256Mb eTT(UTT) followed at 13.3% (US$2.03 to US$2.30). DDR 256Mb 32Mbx8 400MHz and DDR 512Mb 64Mbx8 both grew over 10% and closed at US$2.35 and US$4.55 respectively.

Samsung, which announced the insufficient DDR2 supply, drove this wave of demand upbeat. DRAMeXchange observes that Samsung's distribution agents may even have to source for DDR and DDR2 at the spot market in order to build up adequate inventory. Although DDR2 demand only counts 20% of total demand for DDR and DDR2, the shortage of DDR2 is wide spread at the market.

The low buying incentive of DDR 256Mb 32x8 400MHz, on the other hand, does not limit its upward trending force amid the positive price trend of DDR2. Related spot price was being boost from US$2.11 to $2.35 last week.

Regardless PSC continues ramping up its second 12-inch fab capacity, the relative limited eTT(UTT) chip supply has also boosted price grew from US$2.05 to US$2.30 as the leading supplier still has to assign half of its capacity to its allied partner Elpida.

In addition to the positive factors that drove this price rebound, the recent strong NT dollar against US dollar, should also stimulate DRAM spot prices edging to the range of US$2.5.

1HJan DRAM contract prices up rebound; DRAM output should constrain in February for less working days

DRAM contract price drop eventually came to a stop in the late December. Buoyed from the extended demand upbeat from Christmas, together with the demand growth anticipation for the upcoming Chinese New Year (in late January), contract prices of both DDR and DDR2 rebounded by 2-3% in 1HJan 06.

DRAMeXchange observes that some DRAM makers that offered "one shot deal" packages for some specific customers in 1HDec had stabilized average prices. Some parts even recorded a growth of as much as 5%.

In line with the picking up DDR2 actual demand and the ease of Intel chipset shortage from December, DRAM makers who have aggressively readjusting capacity allocation to NAND Flash has also encourage this price rebound during the traditional low season.

DRAMeXchange observed that DRAM makers, especially Samsung, have shifted more DRAM capacity to NAND Flash production after suffering the massive price dip in September 2005. Of which, Samsung shifted a critical DRAM capacity from its 8-inch fab (Fab 9) and 12-inch fab (Fab 12) to NAND production.

This capacity reshuffle has led to a significant DDR2 output drop from Dec05 with the present supply unable to fulfill actual demand. Despite DDR2 demand at spot market is still falling behind by contract market with a considerable ratio, we foresees DDR2 price to grow further as most available capacity are being booked by PC OEMs.

The ratio of DDR2 module shipment among overall DRAM module shipment stays at 10-20%, according to our checkings at leading module houses. Industry players indicated that the DDR2 and NAND Flash bundling scheme that started from Sep05 has been terminated from Nov05 amid the reducing DDR2 supply.

DRAMeXchange expects DDR2 shortage to persist through late February as most present DDR2 inventory has been eased. Even makers ramp up DDR2 wafer start amount from now should only see positive impact from March. The price trend of DDR2 should enjoy a stronger strength in compare with DDR regarding the present inventory levels of these two generation of chips.

DRAMeXchange expects the substantial demand to persist through late January with the drop of working days (28 days) in February should stir another wave of pre stock demand by the Chinese New Year. However, supply stability should pose a concern for price trend after March. With memory makers aggressively deploying on 90nm transition, transition stability should serve as a critical factor accordingly.

Stay alert about upcoming MacWorld for NAND Flash real-time price trend indication

Spot prices of NAND Flash trended healthier last week with 16GB and 1 GB parts even enjoyed a slight price growth. Although the remainder parts still suffered price drop, the pace of drop had been narrowed down.

Over the week Jan3-10, spot prices of 16GB Flash grew 1.16% at US$71.33, 8GB dropped 1.89% at US$41.77, 4GB dropped 3.34% at US$23.63, 2GB dropped 0.4% at US415.16 and 1GB grew 2.08% at US$7.69.

As MacWorld is about to start today (US Jan 9-16), rumors keep circulate regarding the NAND Flash-based Apple notebook (NB) that may be launched during this event. This potential NAND Flash-based Apple NB should serve as a solid demand driver of NAND Flash.

Reviewing the impact of iPod over NAND Flash, spot prices of NAND Flash were always boosted to new highs amid whatever Apple Flash-based device launches. The rocket-high demand also prompted Apple secured the supply agreement with Flash makers accordingly.

DRAMeXchange regards the upcoming move of Apple to serve as a clear indication for the price trend of NAND Flash. That legendary Flash-based NB, for no doubt, is a critical factor for us to track on the impact.