Asia DRAM Report: Spot Prices Continue Modest Recovery
By Dermot Doherty
Of DOW JONES NEWSWIRES
TAIPEI (Dow Jones)--Spot prices of dynamic random access memory (DRAM) chips continue to stabilize in Asia, though semiconductor industry experts paint a picture of a shaky recovery rather than a dramatic turnaround.
While once bloated inventories at original equipment manufacturers (OEMs) have been mostly digested and those at chipmakers have come off recent highs, the personal computer sector as a whole continues to show only modest improvement, despite pockets of strength.
Over the past week, the spot price of a 64-megabit DRAM chip has edged higher to around US$2.50 from US$2.25 on continued restocking of dwindling DRAM stockpiles by OEMs, while 128-megabit chips have rallied to US$4.80 a piece from US$4.40.
"Although second quarter PC shipments are expected to be better than the first, they'll increase only slightly," said Alfred Ying, semiconductor analyst and head of Taiwan research at BNP Paribas Peregrine Securities in Hong Kong.
Ying said he expects DRAM prices to consolidate during the April-June period, with a 64-megabit chip finding support in the US$2.20-US$2.30 range and a 128-megabit chip around the US$4.50-US$5.00 level.
A recovery will likely only gather steam on stronger PC shipments during the second half of the year, he added.
In DRAM distribution channels, caution persists, though most players agree the outlook for the sector is considerably brighter than in February when spot prices tumbled to historic lows.
DRAM stockpiles have declined and some chipmakers are cutting back on output, or are shifting capacity over to high-performance memory products, such as Double Data Rate (DDR) memory chips.
Still, some worry that the low inventories at OEMs and problems on the supply side have made PC demand seem greater than it actually is.
"No one really has that much inventory now," said an executive at a module maker in Taiwan. "So if we buy just a little bit more DRAM than normal, we see a reaction in spot market prices."
In addition, many chipmakers are taking advantage of the downturn in the industry to carry out equipment maintenance or upgrade their process technology, causing a temporary drop in supply and giving prices a boost, he said.
Many players also remain concerned that PC demand, while robust in the mainland China, remains weak in the U.S. and just average in Europe.
But for all the caveats about the current rebound, there does seem to be a growing consensus in the industry that the market is close to bottom, even though spot prices could ease slightly over coming weeks on seasonal weakness.
"With no one holding that much inventory anymore, the worst seems to be behind us...and we should see spot prices bottom out at US$2.20," said the executive at the module maker. |
