DRAM contract price hints stabilizing signs; persistent NB shipments growth expected to help digesting some capacity

Although DRAM demand from Europe and the US market is temporarily put on hold after Christmas, the rare re-stock activities as observed in Asia once spurred eTT DDR2 spot price to exceed US$0.95 mark, where price of branded chips maintained stable.

Spot price of DDR2 512Mb eTT dropped by 5.6% on week and closed at US$0.84 on Jan 7. Its price once hit US$0.95 level but weak demand and pessimistic outlook discouraged the upward momentum. The price finally resumed to the level as recorded two weeks ago. A mild downhill price trend is expected to see this week. Spot price of higher-density DDR2 1Gb eTT dropped by 1.7% on week and closed at US$1.74 in the same period. In the branded chip segment, spot price for 512Mb parts up by a mild 1.1% on week to US$0.92; where price of 1Gb parts dropped by the same rate to US$1.88.

In the DRAM contract price segment, prices of the DDR2 667 1GB stood at USD 17, roughly the same as what was seen during 2HDec. This was a rare development, especially considering the constant price drops that have occurred over the last half of the year. Citing the stronger-than-expected sales record during Christmas, marketer observers expect seeing re-stock consumption in Jan will lead to a fla a flattish contract quotes in 1HJan.

DRAM makers will soon reveal their financial performances for 4Q07 during late Jan. It is expected that the recent price plummet should imply an aggravated losses among them. DRAMeXchange estimates that major DRAM makers from Taiwan will post a combined QoQ sales decline of 23% in 4Q07.

Although industry players are exposing to stiff challenges, they are expected to gear up to meet the competition in terms of capital and technology advancement in 2008. Backed by an estimated shipments growth of 11% and 25% for desktop PC and notebook this year, memory content per box is expected to increase further to 3-4GB at high-end desktop PCs and notebooks segments.

Given the fact that memory BOM to total system costs is less than 5% currently, we expect this implies a stronger stimulation for DRAM content per box. Low-cost PC, which is gaining popularity, should also help digesting some DRAM capacity as it defines a new market segment besides the existing consumer electronics market.

2008 NAND Flash market outlook snapshot

2008 marks a brand new start for all NAND Flash industry players, though the year has begun with concerns. Estimated NAND Flash demand and supply bit growth shows us that a market equilibrium is subject to volatility as the rate from both sides is close. While Apple continues to play a critical role in the price trend, DRAMeXchange also regards low-cost PC and SSD penetration as side factors affecting the market equilibrium.

The demand trend is positive by foreseeing the end product shipments status. NAND Flash demand bit growth is expected to surpass 130% YoY this year with shipments of the four major applications of NAND Flash, handset, MP3/PMP, digital camera and USB Flash drive (UFD), all set to pick up further this year.

DRAMeXchange estimates that the shipment trend of the aforementioned applications to be: handset to grow by 10% YoY to 1.23bn, with over half of the shipped handsets to equip with external memory card slot; digital camera shipments to grow by over 14% YoY to 130mn; UFD to grow by 25% YoY to 170mn and MP3/PMP to grow by 20% YoY to 200mn, with about 85% of these devices to adopt NAND Flash as the chief storage media. 

Where demand for NAND Flash is promising, suppliers keep expanding at the same time. Supply bit growth is expected to be 130-140% this year. Most suppliers are expected to advance their production 5x nm-class process node with capacity breakdown in 5x nm-class process node expected to surpass 60% this year.

Apple will continue exert a strong influence over the price trend. Prices are expected to change proportionally with the amount it procures. DRAMeXchange expects tight supply in 3Q is still likely, as Apple usually starts increasing its procurement amount in 3Q to feed Thanksgiving and Christmas demand.

Note that we also observe low-cost PC and SSD as the other factors determining the market equilibrium. Whether low-cost PC, such as Asustek’s Eee PC, could sustain its buoyant sales as observed in 4Q07; and whether SSD in SATA and SATA II interfaces will see more penetration at major NB vendors, play vital roles. If demand from these two applications sustains strongly, a relatively stable pricing environment is likely as opposed to the previous two years.

NAND Flash spot price recap for Dec 31 and Jan 7

In the SLC segment, spot prices for both 4Gb and 8Gb maintained stable on a weekly basis, with the former up 0.2% and closed at US$6.04 and the later maintained flat and closed at US$11.50. Downhill price trend was still existed in other density parts, with price of 1Gb down 2.8% to US$2.09; 2Gb down 7.8% to US$3.08 and 16Gb down 5.6% to US$23.03. In the MLC segment, drop is across the board. Price of 4Gb dropped 5.7% to US$2.63; 8Gb dropped 1.2% to US$3.26; 16Gb dropped 3.6% to US$5.62 and 32Gb dropped 1.4% to US$11.73.