Healthy DRAM price trend persists

Demand for DRAM maintains solid in the week Aug 7-15 with DDR prices stayed flat while DDR2 enjoyed slight sequential gain. DRAMeXchange also observes that bullish trend of SDRAM amid the upcoming seasonality demand swell from consumer electronics. Both SDRAM in 4Mx16 and 16Mx16 spec. stay strong.

DXI grew by 57 points to 3,616 last week with the shortfall of both DDR and DDR2 still persists. Price of DDR 256Mb 32Mbx8 quoted flat on a weekly basis but the same-spec. eTT (uTT) prices remain nearer to branded chips' level. Price gain of the higher-density DDR 512Mb 32Mbx8 came relatively strong with a sequential gain of 2% to US$5.51 along with the stable transaction volume.

Demand for DDR2 keeps warming up and boost price of DDR2 512Mb 64Mbx8 667MHz grew by 1.3% to US$4.74; price of the same-spec. eTT (uTT), on the contrary, cooled down slightly and constrained the upward momentum within 1% range.

nVidia posted its record-high quarterly revenues at US$687.5mn in FY2Q (May to July 2006), representing an encouraging YoY growth of 18.1%. The company highlighted that its high-end Quadro-series lineup outshined other product lines with a YoY sales growth of 27%. In line with the satisfactory sales of Quadro, nVidia also rolls out the Plex version in Aug, which is the first solution that supports VCS (Visual Computing Systems) and promises engineers and designers with a drastically enhanced performance over nVidia's current internal graphics solutions for workstations.

Prior to the launch of the consumer version of Vista in early 2007, consumers are now caught in the dilemma to judge the necessity to upgrade their NB memory density in order to feed the demand of the new OS. NB suppliers, on the other hand, observe buoyant sales and the earlier-than-expected positive benefit from Vista, especially when comparing with the DT PC sales trend. Since the basic benchmark memory size for discrete graphics memory is set at a min. of 128MB, NBs that house discrete graphics solutions show encouraging signs. NB shipment from Dell, HP and Acer all enjoy a 30% growth during June to July in compare with May. The buoyant sales are mainly driven by consumers' preparation of the Vista migration.

Although the persistent NAND Flash supply glut in August still weigh on prices in Aug, the rate of drop turn in a milder pace as shown in previous week with the drop rate narrowed to 3% so far in 1HAug. DRAMeXchange believes the price trend grow clear next week as the speculated Apple procurement will be testified soon.

The milder price decline is the result of three factors. 1) Major chip suppliers stringently controlled their supply into the spot market and pricing to minimize speculative trading. 2) End-demand starts warming up prior to the back-to-school seasonality. 3) The mentioned speculation about Apple's massive procurement at Samsung and Hynix start influencing marketers and stabilizing prices without rapid drop.

We observe that the drop of the mainstream 4Gb and 8Gb both constrained within the 2% range. Prices of 2Gb and 16Gb even report upward price trend on the relatively limited availability at the spot market. Those downstream players who used to source more chips in mainstream density during late July were still content with their inventory and start sourcing for more 2Gb and 16Gb chips in return from Aug, the shift of procurement strategy thus encourages prices up.

DRAMeXchange believes this and next week will serve as a key indicator for NAND Flash price trend, as the speculated procurement of Apple from chipmakers and the volume of procurement will affect the performance of NAND Flash in the entire market.