Have spot prices hit the near-term ceiling already?

Weekly ASPs moved up 4.4% last week.

After slowly moving up daily by about 1%, the weekly spot ASP for DDR 256Mb (32Mx8) moved up 4.4%
week-over-week from the 40th week's of $6.48 to 41th week's of $6.77. DDR 128Mb (16Mx8) weekly ASP moved up 6.27% from $3.24 to $3.44. On the other hand, SDRAM 256Mb(32Mx8) only moved up slightly by 0.52% from $2.28 to $2.30; SDRAM 128Mb (16Mx8) moved up 0.37% from $1.60 to $1.61.

Uptrend movement expected to slow down.

The uptrending price movement is expected to slow down this week as prices hit the near-term high since August 1st. The Cost of one 256MB DDR module has risen to 6% of the total PC cost (based on a $60 DDR 256MB for a $1000 PC) and is unlikely to be rise higher given PC OEM's perspective during this weak PC demand cycle.

Module makers and channels are cautious.

Module makers and channels are getting cautious as we approach month-end, and are keeping their inventory levels as low as possible. They are skeptical about the prospects for seasonal demand pick-up and are closely monitoring each individual DRAM companies' increasing DDR output (potential increase in supply in spot market as some products may not yet be qualified by PC OEM companies in a very short-time - therefore being sent to the spot market).

Meantime DRAM makers are still positive on 4Q.

In the meantime, DRAM makers still hold a positive view on the prospects for contract orders. They expect the DDR shortage will last until the end of the year, and that prices can hold relatively stable. Overall, they expect 4Q will perform better than 3Q in terms of total revenue (ASP x Volume).

Marketers expect Oct. will be peak for Motherboard shipments.

As the past few months show, there is a distinction between motherboard shipments, PCs and other components. But marketers can observe the prospective growth signs for Nov. and are beginning to predict Oct. will be the peak for this season. Therefore the expectation of continuing demand may wane and lead to a reduction in pricing strength.

Spot prices remain stable this week.

Sometimes marketers can be overly pessimistic when limp demand prompts observers to over-predict doom and gloom scenarios. Marketers should also keep an eye on how DRAM makers consolidate the supply and prices to keep their revenue floating above breakeven levels. We predict the price will remain stable this week as it's hard to convince marketers the traditional season demand will boost the prices up (given low confidence levels in PC demand).