Weekly Market Info Update
DDR 256Mb 32Mx8 400/333/266MHz have slipped roughly 3% to 4% this past week and dipped blew their 60-day simple moving average at $5.30, $5.21 and $5.16 respectively on April 28, inciting selling pressure in spot market. The uninspiring volume levels in past week's market are indicative of a lack of conviction on the parts of traders which is not surprising ahead of seasonal slow months "Poor May, desperate June".
Concerning the tumbling spot prices, European and USA market showed sluggish demand as well as Asian market. Most module houses and channel traders are adjusting their inventory level to below one week level. As Japan will have holidays off till May 6 and China will take 10-day off since May 1, the marketers show little interest in trading the parts with concerns on expected weak demand in the coming days.
Average prices for DDR 32Mx8 400/333/266 MHz slipped from $5.37, $5.27,$5.28 on April 27 to $5.16, $5.10 and $5.07 at today's close. SDRAM 1Mx16 and 4Mx16 remain unchanged around $1.40 and $4.03 respectively. Elixir 256MB modules are down to $38. UTT rebounded a bit from $4.6 on April 30 to $4.75 of today.
The negative bias is rooted in the marke's lacking confidence of short term pricing performance in spot market. We note that the speculative demand contributed significantly to the surging spot prices since January and the speculators released their parts to the spot market after seeing the pricing peak instead of trading more parts in during the uptrend, therefore, dragged the demand to pretty low level.
However, PC OEMs' demand remains strong, DRAM makers indicated. After the DDR 256MB contract prices boosted over $40, we wouldn't contribute this strong demand to strategic inventory built, instead, we believe this is supported by real demand, possibly from corporate replacement demand. Nanya tech. confirmed that its OEM customers requested emergent drop shipment to fulfill their orders in past month.
A news reported the April DRAM output of Infineon and Micron decrease dramatically which is denied by both companies. However, we believe that the April DRAM supply remains tight as Infineon experienced some unsolved problems on 0.11um migration and Micron allocated more capacity to CMOS sensors plus a negative impact on manufacturing yield loss in Singapore fab. Though, the decreasing ratio is not as high as the news said according to our survey.
The output for SDRAM 4Mx16 is about to increase as SMIC and ProMOS are on progress to raise the capacity allocated to this item. So far, we don't see the output for SDRAM 1Mx16 to increase significantly in the short term.
1H May DDR 256MB contract prices are expected to remain flat at current high levels according to DRAM makers. Despite the dropping spot prices, DRAM makers are to remain their offering for 1H May contract prices stable to reflect the still strong demand from OEM customers.
We believe the near term outlook for the spot market is neutral to slightly bearish. DDR 256Mb 32Mx8 ASP is expected to drift lower to $5.0 soon and gets strong support at $4.50. A positive projection for the pricing performance is DDR 256Mb 32Mx8 ASP will see its bottom in May.
