::Again, spot market disappointed marketers

Although good news is continuously coming from motherboard and notebook segments, the DRAM spot market is still weak. Comparing with the trend of spot and contract price in the past three years, we observe a price surge started from the second half of May 2003 but the spot price stood below the contract price. Earlier this year, owing to the imposition of hefty countervailing duty upon Hynix by the European Union Commission and US Commerce Department, the contract price remained relatively strong.

The shift of PC industry is another factor. Firstly, the average selling price of branded desktop is dropping, which decreases the price premium with clone PCs. The shrink of market share in white box desktop has directly squeezed the size of DRAM spot market. Secondly, the increase of notebook penetration rate enhances OEMs' influence and bargaining power to the PC market. As the DRAM spot market augmented and notebook penetration rate raised, the demand on So-DIMM became vigorous.On the contrary to the pattern of spot price leading contract price in the peak season, the rally this time is triggered by the contract price. However, we still believe the spot price will eventually cross over the spot price as the clone market takes off.