We suspect some reasons to cause this situation. First, early last week, there were rumors circulating that SEC's first half contract price fell by 5%. Even though, in the end, it turned out to be a false alarm, the rumor was still able to scare off some demand. Second, some European traders are still pessimistic about future price trend. Thus, they are only willing to buy small amounts of modules locally. Third, recent currency trend for strong NTD against USD made it hard for sellers to lower offering prices making it hard to tighten the gap between demand and supply. Fourth, seasonal demand is coming to an end.
Some actions were made last week to stimulate DDR demand. For instance, we saw China traders dump Hynix's parts at a low price in Hong Kong spot market. Another example was Micron's agencies dump DDR parts in Taiwan spot market. Since most parts circulating in the market now are released last month with relatively higher prices, above actions would mean selling at a price lower than cost. As a result, we saw modules houses buy at a low price to lower their average inventory cost and to push contract price down towards spot price.
As for SDRAM, some high density parts arrived in the spot market last week and design house have inventory pressure on low density parts. Overall, demand is still weak, yet prices for Hynix and SEC parts remained stable since their agencies have more control over prices, thus low prices were not offered making the price trend to remain stable.
On the NAND Flash side, replenishment of large quantities of SEC parts last week made prices to drop sharply. Especially 2Gb, 4Gb, and 8Gb, relative daily price drops can be up to 17%/7%/4.3%. Yet, prices for 1Gb were relatively stable since current spot and contract price gap is quite narrow.
Some highlights
to take note of this week. Expectations of eTT arrival in
the spot market might decide the future price trend. We believe
it would be hard for price to stay in the upward trend. Another
point is NAND Flash. With the continuing release of high densities
SEC parts release; we speculate prices will decrease till
demand and supply to reach equilibrium situation to make a
stable future price trend which might happen soon. To sum
up, prices in spot market this week, DDR will remain stable
with a little price drop on major parts and contract prices
with a small price drop and modules to reach USD37.5 minimum.
*Judy Chen, Marketing Intelligence Team, DRAMeXchange
DRAM spot prices - 2004/11/2 ~ 2004/11/9
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