Weak contract market and constrained demand last week.

Trading was slow with constrained supply in the DRAM spot market last week. Believing that demand for Chinese New Year would show up at the end of this month, DRAM suppliers didn't release components to market in the last two weeks. On the contrary, buyers with lower price expectation only bought the same amount of their orders on hand, and hence did not push spot price up last week, even though buyers from China had not enough parts in inventory for Chinese New Year. Moreover, according to our observation to the contract price drop of the second half of this month, demand kept weak in the DRAM contract market, which is over 75% of DRAM consumption. Under restricted supply and feeble demand, averages price of mainstream 256Mb (32Mb*8) 400MHz DDR DRAM declined from US$4.06 on 18th, Jan. to US$4.03 on 24th, Jan.

Both suppliers and buyers have increasing pressure this week.

According to the DRAM production output data from our MI system, DRAM vendor should release their parts to spot market because of weak demand in contract market. It is an abnormal situation so we are curious about where those parts are going. Source indicates that DRAM players will release their chips to the market in the next two weeks, so some traders already receiving the message are waiting for those chips in these coming two weeks. Some PC OEMs and ODMs also forecast that PC shipment in Feb will drop almost 10-15% on a month-over-month basis. In conclusion, DRAM vendors seem to have increasing pressure to release their chips before Chinese New Year because demand will be very sluggish in Feb.

Low density SDRAM kept losing money.

In the SDRAM contract market, some PC OEMs with short contract term got lower contract price but some buyer for networking application still got higher contract price for the second half of Jan. In SDRAM spot market, low density SDRAM players still suffering from the spot price below cost won't sell their components at this price level but will wait for supply reduction.

In NAND Flash market, demand mainly focused on 2G, 4G, and 8G NAND Flash for hot season of consumer electronics last week. Due to limited supply and strong demand to 2G, 4G, and 8G NAND Flash, average price of 2G, 4G and 8G NAND Flash went up to US$18,94, US$35.10, and US$64.22 on 24th, Jan from US$17.00, US$32.82, and US$61.72 on 18th, Jan. In line with our market survey and trading, we expect that demand for those items before Chinese New year will remain good but supply will be still tight.