Spot prices level off to contract prices levels during the coming week

The peak of the hot season is behind us.

Traditionally, the PC OEM shipment hot season is from September to the middle of November (in preparation for Thanksgiving and Christmas). Following this period (from the middle of November to December), is the season for refilling clone market orders. Even though we have just passed the peak season for PC OEM buying and are entering the clone market season, we believe the clone market size has been eroded by PC OEM companies - like DELL, HP.....etc. Therefore, this year we expect to see only moderate clone market demand (not overly optimistic).

Shipments from PC OEMs (both desktop and laptop) will decline in December - so as DRAM demand decreases, so will the DRAM spot prices.

PC companies lower the total PC prices to stimulate demand.

PC companies have been able to lower total system cost (component prices down)- and have been able to list an
attractive price - and stimulate PC demand (last chance this year). Recently LCD panel prices came down, CPU prices are lower, and chipset and Motherboard prices have come down as well. In contrast, DRAM prices have come up since Sep. and hard-disk drive prices have risen slighly as well. However, on the whole, system cost has come down significantly. The results of the lower PC prices have not really shown through to end demand yet.

Comdex Fall - so far no good news to report yet.

Our survey thus far from Comdex Fall has shown that overall DRAM spot market demand has not shown any pick-up, and volumes (and transaction sizes) has plummeted down as demand is falling. We predict prices are going to level off to contract price levels over the coming week. Contract prices, however, as we mentioned last week should keep flat in the 2nd half of November.