February 14, 2006--- The slight drop of DXI (from 3,101 to 3,083) highlights the listless demand of DDR over the week Feb8-Feb14.

DRAM spot pricing, especially DDR, sticks to its downward trend last week. Both DDR 256Mb 32Mbx8 400MHz and the same specification 512Mb chips dropped slightly to US$2.23(from US$2.25) and US$4.13 (from US$4.17) respectively. Demand for eTT (UTT) chip, on the other hand, turned weak as PSC may release its Mira-brand chips for module houses. Customers hold their purchase for new pricing amid the general weak DDR demand. Price of DDR2 512Mb 32Mbx8 533 MHz, on the other hand, lifted slightly to US$5.25 (from US$5.18) on solid module demand.

DDR 256MB and 512MB DIMM were priced in the range of US$17.85 to US$19.15 respectively in 1HFeb and represent a sequential price up 2-2.5% (vs. 2H January US$17.5 to US$18.75).

The previous announced US$19-20.5 prices were the average rates that DRAM makers proposed, rather than the final contract prices. PC OEMs were reluctant to accept these quotes as their demand for DDR is not as strong as DDR2 at the present.

DRAMeXchange observes that most first-tier PC OEMs have raised their DDR2 application in PC system in the range of 80% -100% while second-tier makers have also raised the ratio to over 50%. However, some DRAM makers stated that they could only meet 50-60% of OEMs DDR2 demand in February. So, we believe this is overestimated as PC OEMs tend to report higher demand if they have seen a shortage in order to secure their required volume. The shortage on DDR2 should be around 15% to 20%, we estimate.

DRAMeXchange predicts DDR2 shortage will still maintain at 10%+ in March despite most DRAM makers will grow their DDR2 output but Samsung continue to allocate more capacity to NAND Flash, mobile RAM and graphics memory, the shortage on DDR2 is expected to persist through 1Q06.

PC OEMs indicated that they had completed PC system specification formation and would not purchase excess DDR chips even DDR2 is observed. DRAMeXchange believes that DDR demand will mostly rely on the demand from spot market.

The DDR2 shortage, coupled with the postponed AMD DDR2-supported CPU (from April to June), we believe DDR will still dominate as the mainstream memory in the spot market in 2Q06. DDR2, on the other hand, should rise as mainstream at the spot market when DRAM makers able to supply sufficient stocks. DDR prices are expected to stabilize with less volatility when they become legacy products in 4Q06.