Increase in NAND Flash contract Price Reflects insufficient supply from upstream makers

According to the latest NAND Flash pricing survey by DRAMeXchange, the contract price for the 4Gb, 8Gb, 16Gb and 32Gb MLC chips surged roughly 4%-7%. For the SLC chips, the price remained relatively the same among the various densities. This is the second contract price jump to occur for this year, where the first was recorded in 1HMar. DRAMeXchange believes the reason for the price rise can be attributed to the expected insufficient supply from upstream makers in April.

In the wake of the plummeting NAND Flash prices from last year, most of the upstream vendors have readjusted their respective Fab capacity. To decrease the NAND Flash output, some have concentrated on the production of DRAM from Fabs that are able to simultaneously roll out NAND Flash and DRAM. For suppliers that can only produce NAND Flash, most of their expansion plans have been put on hold in minimizing the impact from the persisting price drops.

Recently, MP3 manufacturers have been aggressively placing large orders to NAND Flash suppliers to stock up on inventory. However, the reduced capacity has rendered the major suppliers unable to provide enough NAND Flash chips to downstream retailers or memory card makers.

DRAMeXchange believes that as the NAND Flash supply becomes tighter, the price should remain stable in the short term, where a drop in the price will unlikely be seen. As for how it will change in the next one to two months, further observations need to be made on the production adjustments by suppliers, and whether or not the market demand will continue to grow.

Finally, a comparison of the listed NAND Flash prices from the last session on Mar 19 and Mar 26 is shown below. Spot prices of the 1Gb chip dropped from US$2.30 to US$2.25, a 2.2% decline. For 2Gb, they increased 1.2% to US$2.49; 4G up 19.5% to US$4.29, 8Gb up 25.6% to US$7.96 and 16Gb up 13.7% to $15.

Quarter end affects DRAM demand from PC OEMs; rebound may not occur until May

Sluggish demand in the DRAM market continues to drive down the DDR2 spot price. The DDR 2 contract price for 2HMar has also slipped below the US$ 25 level. As April marks the quarterly end for some US-based PC OEM makers, any increase in the DRAM inventory levels would affect their fiscal results. It is projected that the DRAM demand will not return until May.

Poor demand is seen in the DRAM spot market. In the wake of the reduced supply of DDR chips, its price remained relatively unchanged. For DDR2, they still experienced a gradual price decline. Unless the DRAM prices stop dropping will retailers and module houses be more willing to place more orders. For last week, the DDR2 512Mb 667MHz tumbled to US$ 2.98, while the DDR2eTT dropped to US$ 2.53.

The overly high inventory levels of DRAM makers have rendered the contract price in 2HMar to continue dropping. The DDR2 512MB 667MHz module price has already slipped past the USD 25 level, as various DRAM makers try to clear out some of their inventory.

Despite the fact that the DRAM price has already reached a relatively low level, it should be noted that April also marks the quarterly end for some US-based PC OEM makers. Therefore, in order to present a better fiscal result, everyone will be avoiding an inventory buildup, which results in a weaker DRAM demand. In addition, from the DT or NB shipments in the March to April period, there is no sign of a PC replacement cycle in the wake of Vista's release.