TAIPEI, Taiwan - Dec. 6, 2005 -- As Hynix stopped producing DDR 256Mb 32Mbx8 chips, DRAMeXchange observes a ramp up of DDR 512Mb supply at the spot market. Micron, on the other hand, offers DDR 512Mb chips at a much lower price and bundles the package with NAND Flash for major buyers at the spot market. As DDR2 inventory pressure still exists, memory module makers were reluctant to accept the bundling packages.

The price fall pressure has eliminated the price premium of DDR 512Mb 64Mbx8 over two DDR 256Mb 32Mbx8 chips from 3.2% to negative 2.5%. Absence of Hynix-made DDR 256Mb 32Mbx8 chip at the market posed pressure for some DRAM buyers on available chip procurement.

Spot price of 512Mb 64Mbx8 thus dragged down by 8.5% further from US$4.23 to US$3.9 during November 29 to December 5. DDR2 533MHz has also dropped by 6.6% from US$4.18 to US$3.92 during the same time frame.

DDR2 NMB (non-major-brand), on the contrary, only dropped slightly from US$3.06 to US$3.04. Mainstream DDR 256Mb 32Mbx8 slipped 2.5% from US$2.05 to US$2. As of low density SDRAM, 1Mx16 dropped 1.4% from US$0.59 to US$0.58 while 4Mx16 dropped 1.8% from US$0.91 to US$0.89.

We observe that the major domestic eTT (UTT) supplier starts shipping new lead-free packed eTT parts, however, module houses and some other buyers show limit interest and still prefer adopting the older generations amid the validation concern. Despite the dropping pace of spot prices for DDR 32Mbx8 slow down, major buyers including module houses and brokers were still holding cautious outlook with limited buying incentives.

The proportion of DDR at contract and spot market is split at 75:25, versus DDR2's ratio of 93:7. The relatively low proportion of DDR2 at spot market is constrained by the sluggish demand among consumers. The limited performance leap of DDR2 533MHz and the relatively high platform cost structure discourage consumers to upgrade their system. Intel, which strives to conquer entry-level CPU market lately, has also delay DDR2 transition schedule. DRAMeXchange estimates that only significant DDR2 667Mhz output growth could boost DDR2 spot price up.

NAND Flash spot price drop: weak demand, bulk spot market supply and high price premium

Spot prices for 1Gb, 2Gb, 4Gb, 8Gb, and 16Gb NAND Flash, dropped 2%, 0%, 2%, 5%, and 3% respectively, which closed at US$7.85, US$15.27, US$27.59, US$48.08 and US$83.2 on December 5. All densities end up in a downward price trend this week except for 2Gb maintaining stable.

Demand is scare in the NAND Flash spot market this week. Shattered demand coming from China memory card makers and US MP3P makers showed up. Comparing to last year's Christmas season, this year's demand is relatively slow.

Checks with agents on OEM parts' arrival are said to be limited this week; however, more and more large quantities of NAND Flash have started to circulate in spot market. Thus, Traders who were previous bullish about the spot market is turning bearish and have started to dump their inventory at all cost to avoid further profit loss.

Through our calculations of comparing NAND Flash spot and contract price; spot price is still at a high price premium of 20-37% range comparing to contract price. With only two more weeks left before factories close up for Christmas, if demand doesn't pick up soon, NAND Flash spot price is doomed to keep on a downward price trend.