90nm transition issue aggravates DRAM supply through Nov

DRAM transaction volume in the spot market trends down with DDR2 prices continue slipping last week. The 90nm transition issue at some DRAM makers, which hinders shipment and pressures further on supply, should supplement contract market with stable pricing environment through Nov.

The rebound of demand after the previous holidays proved to be short-lived and buyers still strive to request for lower quotes. Overall price drop of DDR2 averaged at 1.5% last week. Price of branded DDR2 667MHz had dropped to US$6.40 and eTT (UTT) had corrected to US$5.52. Inventory should take another two weeks to consume as present inventory levels among memory module houses are still relatively high.

Following the sequential price up of 2-3% at contract market in 2HOct, DRAMeXchange believes the worsening supply should enable prices to stay firm through Nov. Contract quotes for DDR2 533MHz 512MB DIMM was adjusted by US$1-2 in 2HOct. Some first-tier OEMs secured their deals at the price range of US$47-48 while tier-two OEMs generally had their quotes above US$50.

Since some DRAM makers still encountering 90nm transition issue, the extended lead time pressures supply further. Although the supply gap is temporarily enlarged, we believe this situation is unlikely to persist. However, as some tier-two PC OEMs' shipment does affected and PC shipment usually peak during Oct-Nov, PC OEMs generally project DRAM shortage to persist through Nov, which hints a stable pricing environment.

Listless NAND Flash atmosphere persists ; price correction

No obvious demand for NAND Flash could be observed at the spot market in the week Oct 17-23 with negative rumors further dampening transactions. Price of 1Gb maintains comparatively strong while all others report an average drop of 3-5%. DRAMeXchange concludes the listless transaction and continual price slip as follows:

1. Rumors regarding the controller IC issue of Samsung's K8G8G MLC discouraged consumption. Sellers whom were forced to lower their quotes irritated overall prices of 8Gb parts.
2. Speculation about Apple's procurement amount reduction spreads over the market and prompts marketers (both suppliers and consumers) interpret the news as weakening demand for MP3 players. Some marketers started lower their quotes in order to release stocks that hold on hand.
3. Reduction of working days weighs on downstream players' financial performance. Those who still hold stocks on hand start releasing their stocks with lower quotes in order to compensate loss from reduction of working days.

Prices of all mainstream density NAND Flash continue falling last week except for 1Gb part that did not report significant drop while others' drop average at 3-5%. Price of 1Gb only dropped by a slight 0.4% to US$2.76; 2Gb slipped by 3.1% to US$5.01; 4Gb dropped by 1.5% to US$7.89; 8Gb dropped by 5.1% to US$15.33 and 16Gb dropped by 3.8% to US$33.98.