Skeeter, spot price is like bank Prime rate. Loans are made at rates above and below, using that as a bench mark. Spot prices of DRAM are used for supply to non OEM, non tier 1 customers. Long term OEMs usually get it 50 cents to a dollar cheaper for large quantities. If they go for 50,000 or 200,000 pieces, they pay spot or 25 cents less.
As spot prices move up, OEM contract prices also move. By the way, in last few months, contracts are being negotiated for 2 weeks only, not even a month. A company may agree to supply DRAM chips in large quantities to a tier 1 customer but at a formula, to be adjusted twice a month, pegged to the prevailing spot price. Just like Spot minus 50 cents or 75 cents.
One very large Japanese OEM is so concerned about getting adequate supply of DRAM for next months and beyond, that they are holding special meeting with a Taiwanese DRAM maker in next few days, to sign up long term supply agreement. The Taiwanese DRAM manufacturer may go for such a contract on adjusted spot price basis only.
Can't say what will happen next year, but things are really getting tight now as far as 64 MB DRAM supply is concerned. |
