Happy New Year !!! After a long Chinese New Year holiday, DDR prices are moving up at the first day trading in Asia market. During the holidays, DDR still sustain well and keeps uptrend momentum.. 256Mb 32Mx8 400 / 333 / 266 MHz were up from $3.98 to $4.14, $3.82 to $3.93, $3.73 to $3.82 respectively from Jan. 20 to 27, 2004.

 

Today’s UTT prices perform well above $3.95, even higher than some major brands.We observed that the supply is still limited in spot market and marketers maintain their positive view on short-term market momentum.

 

The DRAM supply is limited for some reasons : increasing capacity allocation to flash and the contribution from mass production for process migration to 0.11um and output from 12” fabs won’t be significant until 2H 2004. Therefore, even the DRAM prices may go down followed the seasonal slow demand in Q1 and Q2. We see the prices also get support at $3.5 for Q1 and the demand will play the key to push the prices up or pull the prices down at Q1 and Q2.

 

 

Regarding the demand, here are two news need to be noticed :

 

(1)Intel has decided to cut its existing P4 processor prices on February 1, ahead of planned February 15. Intel’s decision is     believed to make way for a faster adoption of its 90nm-processed P4 chip – the Prescott which will be rolled out in the     second quarter and has set an aggressive target to capture 40% of the DT PC processor market with the line before year-    end.

 

(2)During Jan. 23 Friday analyst meeting, Micron’s vice president of worldwide sales said consumers may have driven personal-computer demand in 2003, but corporations will be the big shoppers this year. He is optimistic PC unit growth in 2004 will be in the mid-teens range on a percentage basis, compared with 11% growth in 2003.

 

 

Supported by the strong prices for DDR in spot market, 2H January contract prices were pushed up 1.61% and 1.54% to $31.5 and $33 for low and high respectively.Actually, DRAM makers felt great pressure from the continuous downward contract prices since 1H December. As the 256 MB contract prices reach $30,almost $3.5 per chip of 256Mb,close to manufacturing costs applied 0.13/0.14 um process which is used around 55% in the manufactures’ process, DRAM makers were very unwillingly to decrease their offering prices further low. We believe certain PC OEMs, especially Dell and HPQ have sensed this and decided to take big volume from DRAM makers at $30 to $31.5 for promotion strategies.

 

We project the 1H February contract prices will rise at least 1.5% since the spot prices perform very well and the prices on 1H December seemed reaching the bottom the DRAM makers willing to take. However, the pricing upturn momentum has to depend on the continued and real demand from end users. The procurement volume taken from PC OEMs and the demand from corporate computers replacement will the keys to the prices performance since the supply is more for Q1 and Q2.