The spot market is mired in year-end doldrums with limited transactions and inquires. Stocktaking was the main swing factor in the market. No trade in major brands such as Samsung, Hynix...etc was reported. The prices for DDR 400/333/266 fluctuated in a narrow range. However, eTT took the center stage last week with the prices jumping 5 percent in the last trading week of the year to close at $3.68.

We see dim prospects of a sharp fluctuation in DRAM prices this week given that demand remains weak and the pressure for suppliers to unload their stocks eases. But if the spot price extends its fall to touch a specific price level, Chinese marketers will start to purchase chips in the run-up to the Chinese Lunar New Year. On the other hand, at the current price level, buyers from China are hesitant to buy chips. They won't step into the market until the prices weaken further. In conclusion, we believe that DRAM prices are unlikely to experience a significant drop or rise. They are expected to stay stable or slightly drop next week.

As for the contract prices, we can hardly project if demand before the Chinese Lunar New Year will be stronger than the Christmas boom season. However, demand from the United States and Chinese PC OEMs have softened recently. We forecast the contract prices for the first-half of January will decline 1% to 2%.

For NAND Flash, supply for high densities items such as 2 Gb, 4 Gb, and 8 Gb had been scarce in the past two weeks, but their spot prices have been on a downturn with both 2Gb and 8Gb falling by 4% during the period.

Why 2Gb price dropped 4% and followed by 8Gb?

2Gb price drop:

Week before last was the week before Christmas. Demand was coming to a low point since seasonal demand coming to an end. Plus year end billing pressure, traders and module makers might have lowered their price to clear out their stock in order to lower their inventory and fulfill their yearly sales goal.

8Gb price drop:

It has been known that Samsung would cut its high density chip prices to move mainstream density higher. Some might suspect it to be a pricing strategy to react to Micron's shipment of its 2Gb chips recently, however, we believe the main reason for the drop in 8Gb prices will be to move mainstream density further up.

First week into January, we have seen indications of stronger than usual January demand coming from both Europe and Asia. However, contract price wise, we still expect to see high densities prices to drop and lower densities prices to remain stable. As for spot market, we believe spot price might increase despite lowered contract price due to limited supply and strong demand!