DDR price growth hits bottleneck; Positive DRAM contract price trend to persist

Persisted DRAM upbeat sustains DRAM price trend last week with the growth of DDR2 exceeded DDR and represents the weakening price growth momentum of DDR. Marketers are now trending conservative to source for DDR as the prices have already edged to new highs. DXI trended up by 1.24% to 3,661.

Demand for DDR2 is buoyant with branded and eTT (UTT) DDR2 512Mb 64Mbx8 667MHz grew by a respective of 3% and 7.7%. The warming up demand for DDR2 further narrows down the price difference between the same-spec. branded and eTT (UTT) chips from 7% to 3.7%. Reviewing the price gap that had enlarged to as large as over 20% during May to June, the recent narrowing down price gap further testifies our judgment about the migration of DDR2.

Price rally was observed in the spot market last week amid the negative DRAM production speculations; queries for DDR2 grew considerably during Aug 18-21 with prices trended unstable. A Korea-based chipmaker is reportedly said to have transition issue over 80nm with scheduled 4Q output to be affected. Taiwan's Inotera is also said to have a considerable defective wafer amount. Although Inotera officially denied the rumor, the company admitted that monthly output in Aug will be reduced by 5% MoM on the extended production cycle from 56 days to 63 days. Both Qimonda and Nanya said the reduced output would not affect their performances in Aug and confident to maintain stable profits on this upward DDR2 price trend.

DDR contract prices grew by 2-3% while DDR2 stayed flat in 2HAug on the persistent strong demand. Despite memory makers have successfully raise their quotes for two consecutive months, the limited output still enable them to enjoy price growth. DRAMeXchange anticipates that prices will be spurred further on the upcoming back-to-school seasonality as well as the squeezed output from niche memory (Graphic memory, Mobile RAM and NAND Flash) production. Since output is not going to be increased significantly by 2Q07 and OEMs are preparing for Vista, some OEMs have already start inking contract with memory makers to ensure stable supply.

A latest news for the graphics solutions market is the introduction of nVIDIA's nForce Professional 3000 MCP last week. Following the launch of Quadro Plex 100 two weeks before, nForce Professional 3000 MCP is target for professional applications like AMD Opteron-based blade servers and computing farms, computer-aided design (CAD), digital content creation (DCC), and advanced visualization platforms.

NAND Flash price correction persists; Apple unlikely to spur prices up in near term

Price correction of NAND Flash persists last week with all major density parts (except for 1Gb) reduced in the range of 3%. Although both suppliers and consumers seem supplying the market with some positive elements, prices do not stimulate much and this situation is unlikely to change in near term.

For the supply side, DRAMeXchange observes that two NAND Flash suppliers fail to manipulate the price trend as downstream customers have adjusted their procurement strategy to lower risk. Customers are now trimming down their procurement amount amid the continual price correction. Requested amount is now reduced to 1-2 day(s), versus to a minimum of 1-2 week(s) before. Suppliers are now seeing growing difficulties to make a long-term forecast as well as monitoring the price trend.

For the demand side, Apple does start resuming its orders at Samsung and Hynix in larger scale from mid-Aug as mentioned. However, it just doubles the amount that it requested during Apr-Jul instead of a meaningful growth on a yearly basis. Demand is also shadow under the summer holiday at Europe and it is unlikely to see any critical upturn in short term.