DXI dropped by 1.2% (or 34 points) from 2,853 to 2,819 over the week November 2-7. Spot price for the mainstream DDR 256Mb (32Mx8) 400MHz dropped by 1.25% (US$2.4 to US$2.37) while the same-density efficiently tested (eTT) DDR dropped by 4.28% (US$2.1 to US$2.01) last week. The higher density DDR 512Mb (64Mbx8) 533MHz also dropped by 3.19% but DDR2 512Mb (64Mbx8) only slipped by a slight 1.53% amid weak transactions.

The lukewarm DDR2 market did not show any rebounding sign, thus turns out with a relatively high inventory level. DRAMeXchange estimates that the shortage of the Intel made DDR2-supported chipsets should continue to pressure on DDR2 inventory through 1Q06. DRAM makers who transit production capacity from DDR2 to either DDR or NAND Flash from September have led to an escalation of DDR output. This expanded DDR output are be also reflected by the spot price trends during 1HNov.

The contract price negotiations during 1HNov took longer than the previous did as the price reductions that PC OEMs requested were much higher than the rate which DRAM makers could accept. Most PC OEMs strived for a 5% reduction (or US$1 drop) for 256MB DDR/DDR2 module but memory makers only accepted the range at around 2-3% in order to preserve reasonable cost. Some PC OEMs were even requesting for lower prices on Nov7!

DDR2, on the other hand, stood relatively firm upon price reduction requests, as the prices had already edged near to production costs. We estimate that the price difference between DDR and DDR2 will further shrink as memory makers start transiting some DDR2 capacity on DDR production from September with related output ramp comes obvious from November. Although the seasonality impact is about to end and related demand may decline accordingly, we believe the glut of DRAM should continues to enlarge if related output is not impacted by any sudden process nodes migration concerns or rapid drop in wafer-in amount.

Unbuffered DIMM (UDIMM) for DDDR 256MB 400MHz had dropped by 2.5-5.56% (US$19.5-21.25) while DDR2 533MHz dropped by 4.05-4.76% (US$35.5-40) in 1HNov. Noted that as the contract price for the LOW range DDR2 is edging to the production cost level, there is limited room for further price down and we expect DDR2 module price will stay at US$35 in 2HNov.

Contract prices for SO-DIMMs also suffered drop with the DDR 256MB 400MHz dropped by 2.5%-5.68% (US$19.5-22) while DDR2 512MB 533MHz by 5.68%-7.69% (US$36-41.5). We observe that the price premium of SO-DIMMs over UDIMMs is narrowing down with the price fall of SO-DIMM comes in a larger rate than UDIMMs. Noted that SO-DIMMs have been enjoying the price premium over UDIMM during 1H05 due to request for customized specifications and the higher price of printed circuit boards (PCBs) adopted.

NAND Flash all densities on the raise, 2Gb surged 10%

Spot prices for 1Gb, 2Gb, 4Gb and 8Gb NAND Flash, increased 6%, 10%, 5%, and, 3%, respectively, which closed at US$8.16, US$15.02, US$29.14 and US$55.93 on November 8.

First week into November, with the overall NAND Flash supply situation remain tight, thus limiting the amount of supply in the spot market. Transactions in the NAND Flash spot market remained feverish during most part of the week, 2Gb price even had a price increase 4% in a single day. Brokers being the main players in the spot market, prices are being pushed up to sky high. In turn scaring off factory demand since retail market price ceiling is not being lifted with this price increase trend in NAND Flash.

However, price began to drop from yesterday, it especially hit 2Gb. Brokers are begin to sell off some of their stock in the spot market in fear with the future arrivals of NAND Flash supply for this month starting next week. Depending on the fulfillment of NAND Flash demand which should be more clarified from this week; if supply turns more abundant, then, prices are expected to collapse with November being the last month of the Christmas seasonal demand.