Good news is now harder to come by.

:: Spot market taking a step back.

Past history suggests that war can be a turbulent and treacherous time for the market, and most DRAM marketers aren't sure about when the firing in the Persian Gulf War will cease. Therefore, the hope for a replenishing demand rebound from a quick post war may be quashed. Everyone is taking a step back to reality - with the second quarter the traditional IT slow season. Adding the additional effect of slower moving demand during a war period, DDR's sufficient supply looks to be leading DDR prices to another down-trending situation. SDRAM prices, however, are looking steady.

:: Month-end effect pushes down the prices.

Market activities are very slow in the US and Europe areas. Uncertainties over how long the War can prolong effects the channels and causes players to reduce the inventory level to minimum - same intention as the DRAM makers. Module makers and big distributors are going to absorb those excess inventories from DRAM makers by lower than usual street prices. The mutual benefits for this kind of trade-off between module makers/distributors and DRAM makers are - keeping the price fluctuation less (especially in the prices downturn) - and allows gains using price arbitrage for the buyers. DRAM makers can sell out the inventory and hedge/minimize the loss of dumping all inventories into the spot market to cause prices to collapse. Module makers and distributors, on the other hand, can take lower cost for those excess inventories and try to sell at street market prices to gain some profit, however, sometimes it's a risk if the street prices declines further than they expected - then the only benefits they can get are the credit and relationship with those DRAM makers for a future supply discount.

:: Outlook for Apr. is uncertainty.

April's visibility is still very low due to many uncertainties. However, analyzing all the messages we received so far indicates the first half of April is not going to terrify everyone - contract prices have chance to stay flat or just slightly down around 5%. Spot prices will likely follow a modest downtrend toward the normally sluggish 2nd quarter. The delaying shipment of Intel's 865 chipset (Springdale) will push back the expectation of the positive effects of a new model launch- especially important because of dual channels should raise the demand through a higher content per pc.