DRAM Contract price expected to remain flat for 2HNov

Drop in motherboard shipments has affected DRAM demand at the spot market, as reflected by the mild DDR2 price drop. DXI remains static last week at 4,420. Negotiation for 2HNov prices is still undergoing at contract market, and we believe prices may still maintain a stable trend.

Weak demand brought us a quiet marketplace last week. DDR2 eTT (UTT) chips, which saw price skyrocket the week before, started trending downward and closed at US$5.52 on Nov 13, while prices for branded DDR2 chips in 667MHz also slipped by 1% in the same period. DDR 256Mb eTT (UTT), on the contrary, gained by 2% WoW, due to the mentioned supply suspension at a leading eTT maker this week, as well as the associated demand driven by its price advantages.

A limited number of DRAM makers still attempted to raise their contract quotes in 2HNov on the observed tight supply. Some memory makers, on the other hand, noted that price has been staying flat since 2HOct, which interprets lesser possibility for a further price adjustment. We project DRAM contract quotes to stay flat in 2HNov.

The recent lusterless spot market demand is primarily due to the associated motherboard shipments drop amid CPU shortage. Industry makers are generally witnessing shortage at both AMD and Intel with supply for entry-level CPUs growing most intense. Since AMD began shipping CPUs to Dell, the existing insufficient capacity prompted it to reduce shipments to clone markets. Rival Intel is also said to be experiencing entry-level Celeron CPU product lineup falling short of demand, due to capacity adjustment issue.

DRAMeXchange hereby projects that motherboard shipments in 4Q should trim to +15% QoQ growth. As the pre-stock activities among industry players prior to Christmas is about to end in late Nov, and downstream players do not have any significant ramp up in demand, we doubt whether any price catalyst will arrive.

NAND Flash oversupply dampens price trend

After experiencing the seasonality upturn during Sep - Oct, seasonality impact now shows weakening signs in Nov. Although end products still demand a certain quantity of NAND Flash, supply is outpacing demand. The bountiful supply has discouraged suppliers further, as most requested quotes could be hardly accepted, thus resulting in reduced transactions and continuing price corrections.

With most density NAND Flash chips quoted lower at the latest update in Nov, the price trend highlights the observed weakening demand. Current supply of SLC NAND Flash is adequate, in contrast to what we observed in Sep and Oct, especially when suppliers keep releasing fresh stock in 1HNov. The decreased demand and adequate supply is thus further weighing on the spot price trend. We do not anticipate any significant improvement next week, where the longer term price trend is subject to further observations.

Price trend in Nov 7-13 shows us the persistent price correction. Prices of 16Gb fell 2.2% to US$31.28; 8Gb followed at a reduction rate of 1.6% at US$14.76. Prices of the remaining densities were limited in the range of 0.5%.