DRAM contract price stops falling in 2H June
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Esther Lam, DIGITIMES, Taipei [Saturday 23 June 2007]
The continuous drop in the price of DRAM seems to have ended with the flattish sequential contract price recorded in the second half of June. Besides a gradual pick up in demand, DRAM makers who aggressively transitioning to 70nm production, which resulted in a prolonged cycle time, are major reasons that prices held firm.
Demand up, supply down stabilize price
Some PC OEMs are already in talks with DRAM makers over long term supplies to fulfill a demand pick up during the back-to-school season, DRAMeXchange said. Nanya Technology even raised its quotes for selective PC OEMs, said company spokesperson and vice president of global sales and marketing Pei-lin Pai, according to Taiwan-based Chinese-language media.
The flattish contract price trend may be also a result of DRAM makers' transition to 70nm, which resulted in a prolonged cycle time and balanced demand-supply situation. DRAMeXchange attributed last week's DRAM spot price rebound to such a reason, saying that DRAM makers saw their output volume during May and June affected by the transition.
News regarding a transition issue among Taiwan DRAM makers has circulated for a while, first starting with ProMOS Technologies and later Powerchip Semiconductor Corporation (PSC), both of whom are relatively aggressive in their 70nm ramp up.
Nomura cited sources in saying PSC was having yields issues when transiting from 90nm to 70nm production, with yields failing expectations. A tight supply resulted and the equity firm said this situation should remain for the short-term as yield -ramps are time consuming.
Goldman Sachs expressed a similar view as Nomura, saying that the technology bottleneck may affect PSC's output by 2-3% and 5-7% in June and July, respectively. The equity firm said PSC expects the issue to be fixed by August.
Steady upward price trend likely
Suichi Otsuka, chief operating officer (COO) of Elpida Memory, which holds about a 12% share of the global DRAM market, stressed that DRAM demand will be spurred by growing PC shipments and DRAM content per box but that a rapid rise in DRAM average selling price (ASP) is unlikely, according to an EETimes report.
Otsuka projected that PC motherboard production from Taiwan-based makers will average 18.4 million per month in the third quarter and 20 million in the fourth, up from 17.9 million recorded in June.
DRAMeXchange is also delivering a notionally optimistic outlook. The memory-trading firm anticipated that DRAM contract price may see room to trend up if the recently observed price rebound in the spot market can sustain its upward momentum.
Mainstream 512Mbit DDR2 contract prices: Jan-Jun 2007 (US$)
Period
DDR2-667 (64Mbx8)
Change
DDR2-667 (32Mbx16)
Change
1H Jan
5.88
(1.78%)
5.88
(1.78%)
2H Jan
5.75
(2.21%)
5.75
(2.21%)
1H Feb
5.00
(13.04%)
5.00
(13.04%
2H Feb
4.38
(12.40%)
4.38
(12.40%)
1H Mar
3.81
(13.01%)
3.81
(13.01%)
2H Mar
3.00
(21.26%)
3.00
(21.26%)
1H Apr
2.50
(16.67%)
2.50
(16.67%)
2H Apr
2.13
(14.80%)
2.13
(14.80%)
1H May
1.94
(8.92%)
1.94
(8.92%)
2H May
1.81
(6.70%)
1.81
(6.70%)
1H Jun
1.66
(8.29%)
1.66
(8.29%)
2H Jun
1.66
(0.00%)
1.66
(0.00%)
Source: DRAMeXchange, compiled by Digitimes, June 2007
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