Limited Spot Price rebound expected as module houses stock up on low-priced chips

In the spot market, demand in the new emerging markets are picking up ahead of China's National Day holidays. Unfortunately, spot prices are not increasing correspondingly. Some module houses and retailers continue to sell their memory products at very low prices. Last week, the DDR2 eTT and branded chip prices respectively hit a low of USD1.15 and USD 1.48.

In the contract market, due to a component shortage, it is constraining the shipments of PC OEMs for the second half, where some manufacturers have even lowered their overall shipment targets. However, with the parts shortage expected to improve after October, they still have a chance to boost their shipments before the Christmas selling season. Demand in the contract market is thus projected to persist until November. Unfortunately, the relatively large price gap with the spot price will continue to drag down the contract price in October.

For this year, DRAM prices have declined sharply during the strong seasonality, causing many module houses and retainers to incur heavy losses. Recently, some retailers with a larger economy of scale have started to purchase the cheap DRAM chips in hoping to offset the previously higher average costs, which thereby increases the likelihood of a price rebound. However, DRAMeXchange believes once the traditional hot season of the PC market ends, the price increase will not be too significant, as DRAM makers continue to ramp up production.

China National Day holidays spark a slight increase in NAND Flash demand

For 1HSep, the NAND Flash demand was weaker than what is traditionally observed. In general, the overall market trading was relatively flat. However, after mid-September, vendors of downstream memory products, such as memory cards and USB Flash Drives, started to slightly increase their chip purchases, as major Flash suppliers lowered their prices in reflecting the lower manufacturing costs. Beginning from last week, in light of the Moon Festival holidays and China's upcoming National Day holidays, downstream vendors are also placing more orders in order to stock up on the chips that will be produced during the holidays.

Upstream suppliers are currently negotiating with clients on the prices of the MLC 8Gb, 16Gb and other mainstream chips, and hope to see the gap with the spot price to narrow. DRAMeXchange believes downstream manufacturers will acquire more Flash chips in accommodating the demand that is expected to arise from China's National Day holidays. As for whether or not changes will be seen again in the Flash contract price during October, it will depend a great deal on the end market performance during October, along with how much inventory vendors stock up for the Christmas holidays.

Finally, a comparison of the listed NAND Flash prices from the last session on September 17 and the first session on September 26 is shown below. Spot prices of the 1Gb SLC chip rose from US$3.66 to US$3.71, a 1.4% increase. For 2Gb SLC, they jumped 9.5% to US$6.02; 4G SLC up 5.5% to US$8.44; 4Gb MLC down 1.0% to US$6.25; 8Gb SLC up 0.8% to US$15.49. Meanwhile, the 8Gb MLC increased from US$6.57 to US$6.75, up by 2.7%. The 16Gb SLC was up 2.8% to US$25.84; 16Gb MLC up 3.9% to US$13.82; 32Gb MLC down 0.3% to US$26.00.