TAIPEI, Taiwan - Jan. 17, 2006 -DXI index continues trending upward by a slight 25 points to 2,925 last week, which signifies the positive impact of tight DDR2 to demand. The rumors of Mira-brand eTT(UTT)'s upcoming stock release to the spot market also turns most marketers stay aside for clear price DDR price trend indications.

Spot price of DDR 256Mb 32Mx8 stabilized at US$2.34 while DDR2 prices boosted by 5% last week at US$4.64 amid the inadequate Samsung bits supply.

The bullish spot pricing trends also prompt DRAM makers to propose price raise in 2HJan, especially to raise DDR2 prices to edge further to DDR levels. After the nose-dived price fall of DDR2 512Mb spot price since mid April 2005, related price trended closer to contract price during fall (Oct-Dec 2005) (see Chart 1). Spot price of DDR2 512Mb is still traded at a lower price at spot market than contract price at the present.

Chart 1

Samsung pose DRAM shortage mist, DDR2 equilibrium to maintain through 2Q06

Samsung describes its DRAM and NAND Flash production roadmap explicitly during the recent conference call. The chip giant reports that its DRAM output only increased by a slight 5% QoQ but NAND Flash, on the other hand, records a significant 44% QoQ growth. It expects DRAM output will shrink by 3% QoQ in 1Q06 but Flash will jump 17%.

As Samsung continues to place a critical focus on NAND Flash, it plans to boost its DRAM output by deploying 0.10- and 0.11-micron processes for DRAM production at its 8-inch fabs. DRAMeXchange expects the growing 90nm production proportion, should help Samsung catching up with real-time demand in 2Q06.

In line with the temporal DRAM supply shortage, DRAMeXchange estimates that overall PC shipment should decline by 8.2% sequentially in 1H06 amid the traditional low seasonality impact. We see demand from emerging markets as the chief factor of blurring seasonality impacts as demand from these markets should help holding memory demand at certain levels.

As demand from these markets still constrain at the US$250-worth DDR-based platforms, Intel announces to maintain production of the entry-level 865-series chipset in order to secure its foothold at this sector.

In line with DRAM makers gearing up on their DDR2 production, DRAMeXchange observes uncertainties factors for DDR2 equilibrium in 2Q06. As the impact of new available capacity should only reflect after two months of production, the potential market equilibrium should challenge chipmakers' capacity allocation wisdom!

Stock dumping drags NAND Flash prices down

NAND Flash in all range of density trended downward last week amid the stock dumping acts. Some Korean distributors dumped a considerable amount of Samsung- and Hynix-brand chips at the market. Despite some marketers expressed interest, demand was limited to selective downstream players only rather than an industry-wide demand pick-up. Most downstream players were conservative to make any move as they suspected spot prices should have room to drop further.

Those marketers who dumped their stocks after being disappointed by the absence of a NAND-based Apple notebook also led to the price falls. Some players initially expect Apple would debut a Flash-based NB during the recent MacWorld event. They released their stocks immediately after the event in order to avoid further loss amid the weak price trend.