Transactions are limited in the DRAM spot market last week with limited supply and weak demand. According to the contract price drop of the first half of this month, demand from PC OEMs remains weak, and PC OEMs also maintain the views of weak demand and lower contract price in the second half of this month. Although DRAM suppliers are looking forward to demand for Chinese New Year, buyers, believing that spot price will drop at any time, did not increase their purchase and waited for lower price. Some traders also sold their chips, which will release later this week in advance. Average price of mainstream 256Mb (32Mb*8) 400MHz DDR DRAM was up to US$4.1 on 10th, Jan. from US$4.04 on 3rd, Jan.

Source indicated that DRAM players will release their chips to the market next week, so all traders are waiting for price drop this week. Actually, some Korean DRAM players didn't release their chips to the spot market for a while, but there were some chips trading in the spot market a couple of days ago. We also notice that other DRAM vendors shipped more chips to the spot market. DRAM vendors seem to have pressure to release their chips; therefore, we forecast that price will drop next week. If price can drop quickly at a certain price level, Traders from China will start to buy more chips for Chinese New Year.

In SDRAM spot market, low density SDRAM players still suffered from the below-cost spot price. They won't sell their components at this price level but wait for Korean DRAM players to cut their capacity allocation to low density SDRAM. Some high density SDRAM products are also influenced by PC seasonality, so contract price of 128 Mb SDRAM drops 2.78%-3.45% for the first half of Jan but that of 256 Mb SDRAM remains stable for networking application. We don't see any sign for price rebound next week but we believe price will remain stable or drop slightly for SDRAM spot market.

In NAND Flash market, demand from China mainly focused on 2G and 4G NAND Flash for consumer electronics last week. Due to restricted supply and steady demand to 2G NAND Flash, average price of 2G NAND Flash increased to US$16.92 on 10th, Jan from US$16.91 on 3rd, Jan. Some traders indicated that NAND Flash makers will release NAND Flash products to spot market a few days later. Therefore, all buyers are looking forward to lower price, and the degree of price drop depends on the volume of NAND Flash released. We predict that the prices of NAND Flash will have more stress to decline this coming week.