DRAMeXchange: Contract prices may come back to haunt spot market
digitimes.com
Market Intelligence, DRAMeXchange; Esther Lam, DigiTimes.com [Thursday 7 April 2005]
Spot pricing seemed to bottom out early last week, as DRAM suppliers stopped releasing their inventory into the market. In general, in order to bolster their financial results, DRAM vendors try to maintain the lowest possible level of inventory at the end of each quarter, which in turn places downward pressure on spot prices. However, once the market entered April, spot prices began rebounding. The average price of 256Mbit DDR 400 increased from US$ 2.45 on March 28 to US$ 2.55 on April 4. Although spot traders anticipate spot prices will remain stable this month, developments in the contract market may have a strong influence in the spot market.
Contract prices to drop further
With PC OEMs and DRAM vendors expecting sluggish worldwide PC shipments in the second quarter, DRAM suppliers have undertaken price-cutting strategies in an attempt to stimulate DRAM consumption. According to our market survey of DRAM suppliers and PC OEMs, the first contract price of April will probably see a drop of approximately US$2 for 256Mbit DDR.
Because of the significant downtrend of contract prices, market insiders predict that more inventory will be released into the spot market over the next two weeks, which will place price pressure on spot and eTT prices.
NAND Flash: Spot market cautious
In the NAND Flash spot market, Samsung aggressively released NAND flash to the market last week. However, some traders made their deals in advance last week, so that stock may not actually be distributed in the spot market until this week, a market insider indicated.
In addition, NAND flash players will be outputting more products in the second quarter, as system makers have booked more orders in anticipation of increased MP3 sales, due to the popularity of products like the iPod shuffle. However, the second quarter is traditionally the low season for consumer electronics and we doubt demand will meet the system makers’ expectations. Therefore, there may end up being oversupply of NAND flash in the market and spot prices may drop significantly. However, due to the long supply chain, it may take about a month for the NAND flash spot market to reflect the status of the industry. So for those looking to see how the NAND flash market will trend, it may be useful to pay careful attention to consumer sales this quarter.
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