Prices coming down sharply as month end selling pressure increases

Month end dumping begins.

Although we are not at month-end yet, the selling pressures from DRAM makers have already began - the price war has recently been launched. We have already seen a large amount of original chips from DRAM makers out into the open market with negotiable prices. More aggressive competition may also occur in the OEM brand or white-box chips due to the excess wafers and no mark chips that have been selling at low prices in the market before month end.

Spot prices

There is little to suggest that DDR prices will not trend down sharply due to dumping out of inventory prior to Chinese New Year. After Chinese New Year, DRAM makers don't predict any major pick up in volume (replenishing orders from major PC OEM customers), therefore they have no good reason to hold or build inventory for the traditional slow 1Q demand.

From the demand side, both the PC OEMs and module makers are expecting a decline in DRAM ASPs during the seasonally slower first half of the year. Inventory management is one of the key factors in controlling costs during this sluggish demand period, therefore they just try to keep the lowest inventory level for production needs.

For the middlemen - traders are most likely just trading for the short-term (they have a no inventory policy). However, official distributors are sometimes forced to take more than what they need - they also face the inventory management issues of selling-through with lower prices at month end.

This week, we expect DDR prices to drop sharper than they have been - there are always better competitive prices coming out for any inquiry.

SDRAM prices are also facing the downward pressure, but not for the same reasons as with the oversupply of DDR. The main reason for SDRAM pricing pressure is that traders want to cash the SDRAM in before Chinese New Year. It's just a short-term phenomenon and we don't expect SDRAM prices to drop as sharply as DDR.

DDR contract prices continue trend down, and SDRAM prices are relative stable to up a little bit.

DDR-

256MB DDR contract prices have settled down around the $45 ~ $48 range; down from the $51~$54 of 1H of Jan.
256Mb DDR chip prices are quoted at $5.5~ $6 down from $6~$6.5.
128MB DDR are around $25~$27 down from $25~$28. 128MB isn't down as much as 256MB; because there are not much 128MB DDR modules. The main stream in DDR is 256MB, not 128MB.
128Mb DDR chips are quoted at around $2.75~$3.00 down from $2.85~$3.35. 128Mb DDR chip prices are almost the same as SDRAM 128Mb chip prices.

SDRAM-

256MB SDRAM module contract prices are selling at $33~$40 up from $30~36.
256Mb SDRAM chip prices are quoted at $4~$5 up from $3.25~$4.25.

128MB DDR module contract prices are selling at $18 ~ $25 up from $17~$22.
128Mb DDR chips are still quoted at around $2.50~$3.00.