Pessimistic outlook for both SDRAM and DDR price this week.

:: Supply increased in January over 8% MoM.

Output for January increased 8% MoM to reach over 200 million units (256Mb equivalent). We expect output to continue increasing in the coming months from a combination of improving yield rates and new capacity (output) from 300m fabs (Infineon, ProMOS and Powerchip). This trend looks like it will continue for the first half of this year - without a suprise pick-up in demand, and with no signs for production cutbacks yet seen... Every individual company is aggressively working on improving yield rates to lower production costs. In short- it's oversupply - Prices are looking downward.

:: Demand is muted.

Even though the China market is back to normal working days, there are no demand refilling orders. Even worse, vendors there are beginning to get rid of their inventory - therefore, prices are plumeting down. Original Module prices for DDR 256MB are just slightly above $30 in the channel and OEM Module prices are already trading below $30. DRAM makers are not trying to maintain prices anymore. Prices are trading down day by day in the market. Marketers have very little to be optimistic about (supply increasing, demand sluggish, war impact), and no one wants to keep inventory in-house. Module inventories in the US are relative higher than other areas; there is more downward pressure from there.

:: Consumer Graphic DRAM prices relative stable.

For mainstream commodity DRAM, prices are trading down. However, the consumer graphic DRAM prices are relative stable as demand for consumer products are performing better than PCs. However, within the graphic DRAM market, we have observed more and more companies joining this market to get a piece of the pie. Price competition is heating up margins are shrinking as well. Almost all DRAM IDM companies extend their product lines to produce graphic DRAMs.

:: DDR contract prices drop sharply. SDRAM contract prices are relative stable but volume shrink down.

DDR-

• 256MB DDR contract prices have settled down around the $38 ~ $42 range.
• 256Mb DDR chip prices are quoted at $4.25~ $4.85.
• 128MB DDR prices are approximately $18~$22.
• 128Mb DDR chips are quoted at around $2.20~$2.70.
• Volumes for 1H of Feb. are also trending down since OEM companies still carry some inventory from Jan. There is no rush for them to purchase higher prices right now - expecting 2H, contract price for 256MB DDR will be below $35.

SDRAM- Keeps stable

• 256MB SDRAM module contract prices are selling at $37~$40.
• 256Mb SDRAM chip prices are quoted at $4.2~$5.
• 128MB SDRAM module contract prices are selling at $18 ~ $25.
• 128Mb SDRAM chips are still quoted at around $2.50~$3.00.
• SDRAM contract volumes have decreased significantly already. Except for some server and workstations, there are few models using SDRAM and it will not be an indicator anymore. Therefore we plan to stop quoting SDRAM contract prices from 2Q of this year.