DRAM spot prices wobble at high level; contract prices sustain gain momentum through Nov

DRAM demand recessed amid inventory pressure since industry players are aware of their inventory level during month ends and the anticipated demand swell during the week-long holiday at China (from early Oct) is not as strong as expected.

Price correction of DDR2 continued last week with DDR2 eTT (UTT) dropped by 3.8% to US$6.07 and DDR2 667MHz dropped by 1.3% to US$6.65. DXI was trended up slightly to 4,383 from 4,362.

Supply at contract market is still falling short of demand in 1HOct with some suppliers attempt to raise quotes considerably during this seasonality demand upturn. However, DRAMeXchange believes that their attempt will be discouraged as DDR2 module that had already surpassed US$45 will discourage DRAM content per box amount among PC OEMs.

Negotiation is still undergoing but we stick to our previous forecast and project a 4-5% further gain in 1HOct. The magnitude of growth will probably weakened or remain stable in 2HOct along with the ramping up 80nm output among Korean makers and fresh 12-inch capacity form Taiwan players.

Supply priority weighs on NAND Flash price trend

Spot market of NAND Flash was quiet in the last week of Sep, disregard downstream players suppose to secure fresh stock in volume during month ends. Most downstream players do not obtain their stocks as they usually do since suppliers have prioritized supply for key customers (e.g. Apple, Sony, SanDisk and Kingston). Overall supply at Greater China area (in contrast to Jul-Aug period) dropped, thus discourages sales. DRAMeXchange expects this supply scenario to persist through Nov but the amount that those tier-one customers in Great China area could obtain from their suppliers is subject to further observation.

Alongside with Apple and SanDisk's respective launch of high-density MP3 players (6GB to 8GB density) during late 3Q, 8Gb and 16Gb have become the hottest commodity at the market since Sep and related prices are relatively strong on pricing. The insufficient supply was reflected in the persistent price upward trend and 16Gb part continued enjoying 3.7% gain last week and closed at US$35.75 on Oct 2.

Prices of all mainstream NAND Flash dropped slightly in the week Sep 26 to Oct 2, price of 1Gb dropped by a slight 0.4% to US$2.81; 2Gb dropped 1.1% to US$5.17; 4Gb dropped 0.6% to US$7.98 and 8Gb dropped by 1.9% to US$16.34.