Up, up, up with the mainstream DDR 32Mx8 on a track of new session highs……

DDR 256Mb 32Mx8 400/333/266 MHz surged 15% to 18% to $5.25, $5.18 and $5.15 from March 17 to 23, and sharply dropped 2% on March 25 to $5.08, $5.06 and $5.02 due to a dumping from Chinese market for concerns on whether the prices could sustain. The uninspiring volume totals reflect the market’s underlying anxiety ahead of the slow season, the second quarter. However, prices recovered soon to the previous highs for the next two day and close on $5.29, $5.29 and $5.25. We note that DDR 256Mb 32Mx8 333MHz is currently traded higher than the 400MHz part since March 29 with spiraling demand.

 

Some module houses still stop offering modules and some major DRAM makers have stopped shipment to spot market since mid-March. The trading activities turned slow on March 29 after the prices rocketed again. Demand from Chinese market shank and the module houses put their daily procurement on hold to watch the next pricing move. Elixir has been traded at $42.5 to $43.5 and UTT is quoted to its unbelievable high at $5.17 to $5.23.

  

Near its highs of the session, the market continues to trade with a firmly positive bias

Contributing to the favorable sentiment is anticipation of supply constraints by DRAM makers unsmooth 0.11um migration and increased allocation to other profitable products such as flash and low density SDRAM. Even so, the action over the past couple of weeks has raised concerns regarding the spot market’s outlook and whether marketers are finding themselves in the midst of irrational pricing uptrend, we would like to point out that the market’s fundamentals remain bullish for the following reasons.

 

 

Attracted by the high profit on flash and low density SDRAM and to hedge the risk involved with volatile DRAM prices, DRAM makers have set plans to increase the capacity for Nand flash and foundry service at the end of last year. Besides, most DRAM makers have experienced unsolved bottlenecks on 0.11um migration and delayed their volume production on this advanced technology. The yield loss from technology transition in line with unsatisfied yield rate at pilot run stage also suppress the bit growth 1H 2004. As we estimate, the DDR SDRAM bit growth for Q1 2004 is around only 5%, constrained by the factors mentioned above.

 

 

According to some top research firms, 2004 IT recovery and corporate PC replacement  will boost PC shipment growth rate to double digit (%). For the application, we estimate the memory installed per system will increase 33% from 376MB (Q4 2003) to 500MB (Q4 2004) with higher 512MB applied on Dual channel as well as Grantsdale chipset even there’s lack of killer application. Moreover, 1GB memory will be common in high end consumer desktop. Therefore, we expect high growth on DRAM consumption for 2004.