Controversial price trend for this week

:: Contract price looks up, but not huge jump.

Despite media reported the anticipation on 20% surging contract prices, our first round survey did not show over 10% rising on contract prices. Although DRAM supply does show the tightening allocation situation due to recently aggressive restocking from middle channels and module makers, PC OEM still holds the conservative end-demand sell-through concerns to resist over 10% spurting price. Traditionally, 2Q is not the hot season for preparation yet, this year we have experienced the combination of the post-SARS, expectation for new spec. effect (Springdale's dual channels) and time conjunction to 3Q to cause the early triggering off price race. Our forecast for 2H contract price will up within 5%~10% range.

:: Spot prices show the controversial trend.

Profit taking murmurs are flowing on the floors, traders begins to cash in which likely trades down prices. However, once price trades down a little bit there comes the big hand to take over those positions and stock them which are converse price up again. Therefore, this week, we can observe volatile price trend. Traders will secure the profit by turning partial stock to cash; in the mean time also seek the lower prices to restock again as they all take positive spot pricing on July.

:: Transaction volume is down.

As prices hovering, transaction volume is down for lull turnover. Buyers are afraid to buy at high without a good visibility price trend for coming week; sellers also hesitate to sell all if there is no cash flow pressure since they all optimistically anticipate on July pricing. DRAM makers are the only one who is solid holding the high official prices.

:: Overall ASP should moderate get down a little bit this week.

Overall, we believe the moving asp for this week will be modified down a little bit since the profit taking selling and some inventory adjustment actions.