Spot market in demand for 8Gb NAND Flash chips

Spot prices for 1Gb, 2Gb, 4Gb and 8Gb NAND Flash, were closed at US$6.9, US$11.71, US$23.77 and US$50.87 respectively on October 3. Over the week September 27 to October 3, spot prices of 2Gb and above NAND Flash rebounded by a slight 1%-2% growth while 1Gb remained notionally stable.

8Gb spot price to reach over $50 mainly caused from speculation

Overall NAND Flash supply is tight in September with the 8Gb part still placed under spotlight among traders. Spot price for 8Gb exceeded $50 last week in a shaky way rather than a straightforward upward trend, which implies demand is not that strong actually. The only reason for 8Gb NAND Flash spot price trend upward should be the speculation activities only.

Overbook supply, delayed seasonal demand and quarter end pressure for aftermarket to result in sustainable supply in NAND Flash spot market

Although available supply could only fulfill less than 50% of second-tier memory module makers ' demand, DRAMeXchange does not see the supply-demand balance at end market being upset and these second-tier players are not expose to any NAND Flash shortage actually. We believe present demand is being overbooked as module makers tend to prepare stocks to meet the traditional hot season in September. With reference to our channel checking, the seasonality demand upbeat delayed in this year and the actual demand at the markets is not as strong as expected.

With the sufficient memory stocks keep on hand, players tend more open to sell their stocks at the spot market for making profit upon the price differences at the contract and spot markets. Take 8Gb for example, the profit gain between contract and spot price difference could be as much as 13-28%.

Tightness in high density NAND Flash supplies will ease in 4Q'05 with new joiners

Substantial demand from MP3 player and portable multi-media players (PMPs) makers led demand of 8Gb and above NAND Flash rockets over the last two months. However, there are only three players capable for high-density NAND Flash production at the moment, namely Samsung Electronics, Toshiba and Renesas Technology.

These players only start to produce high-density Flash in 3Q05 by adopting both single level cell (SLC) and multi level cell (MLC) architectures to produce 4Gb chips on 73nm and 90nm nodes. Leading player also advance production to 70nm for 8Gb MLC production.

We forecast that stacking chips in either double density package (DDP) and quad die package (QDP), together with the yield progression under mass production should only progress in 4Q05 along with new comers' (Hynix Semiconductor, STMicroelectronics and Micron Technology) arrival. Output for 8Gb and above density Flash supply should be still falling short of demand in 3Q05.