Contract vs. spot
DRAMeXchange: Contract market is the sweet spot for chipmakers
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Market Intelligence, DRAMeXchange; Jack Lu, DigiTimes.com [Wednesday 3 November 2004]
For the majority of the period since August, DRAM chipmakers have enjoyed higher profits by selling more chips to PC OEMs at the expense of shipments to distributors or traders in the spot market. DRAMeXchange believes the situation will persist in the short run.
Except for a brief period in early October, DRAM spot prices have been consistently quoted below contract prices since the situation reversed in early August. (See Chart 1) Chipmakers have allocated more capacity to the contract market to reap higher profits.
In evidence, ProMOS Technologies shipped 63% of its DRAM output to the contract market, and other players reportedly have planned to increase allocation for PC OEMs.
DRAMeXchange estimated global DRAM shipments in September were split 77.8:22.2 between the contract and spot markets, versus a 76.2:23.8 split in June. (See Chart 2) DRAMeXchange believes the split widened in October.
Going into November, DRAMeXchange has not observed any signs that spot prices will reclaim a premium over contract prices, and it believes contract prices will continue their uptrend.
Source: DRAMeXchange, compiled by DigiTimes, November 2004.
Source: DRAMeXchange, compiled by DigiTimes, November 2004.
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