DRAM/NAND Flash spot market update

DXI went down by 33.49 points to 3012.82 on October 11 from 3,046.31 on October 4, 2005. In past week, DRAM spot prices were traded in narrow range due to sluggish demand. Prices of mainstream chips 256Mb (32Mbx8) DDR 400MHz were down slightly from $2.57 to $2.55, with 256Mb eTT slipping from US$2.25 to US$2.22, 512Mb (64Mbx8) from US$5.51 to US$5.47, and 512Mb DDR2 from US$5.07 to US$5.02.

In Korea and China, transactions in the spot markets were slow as a result of traders' cautiousness on weak pricing and long holidays at the beginning of this month. In Europe, buyers were able to successfully bargain for lower prices with chip suppliers.

For NAND flash, due to the supply tightness in the market, spot prices continue to trend upward but transaction volume is limited. Prices of 1Gb/2Gb/4Gb/8Gb chips increased 3.45% from US$6.9 to US$7.14, 8.6% from US$11.77 to US$12.79, 9.1% from US$23.89 to US$26.09, and 5.16% from US$50.91 to US$53.54, respectively.

DRAM contract market update

Suppliers' capacity shift to DDR2 currently remains to be ahead of the actual demand at the end market. DDR supply, on the contrary, continues to be tight. As a result, DDR contract prices were flat in the second half of August and the first half of September while DDR2 prices went down. However, despite demand for DDR remains vibrant, DDR contract prices slipped in the first half of October because of the week DDR2 prices. Buyers aimed to narrow the price gap between DDR and DDR2.

DRAM September production output update

Total DRAM output increased from 568.74 million 256Mb equivalent units in August to 627.79 million in September. We believe Korea, Europe and Japan suppliers' 12-inch capacity ramp up and 90nm process nodes mainly contribute to the increase.

DDR2 out increased from August's 192.60 million 256Mb equivalent units to 238.80 million and accounted for 37.83% of the global total DRAM output in September, compared to 33.66% in August. DDR2 output from Samsung, Infineon, Elpida and Nanya exceeded their DDR output in September, and as a result, these companies experienced higher pressure on lower than expected DDR2 demand.