DDR2 inventory reflects weak market, while NAND flash inventory signifies strong market
Hans Wu, Taipei; Esther Lam, DigiTimes.com [Friday 4 November 2005]
Although the DDR2 contract price (512Mbit DDR2-533) dropped 15% in the second half of October, sources at memory makers expect the rate to slow in the upcoming contract price update. NAND flash, on the other hand, is seeing strong demand, pushing memory-trading houses to hold their stock on the expectations of a further uptick in the spot market.
With reference to the last DRAM contract price update (2H October), overall DRAM prices dropped by almost 5% sequentially and memory makers predict that the upcoming price update should continue trending down but at a slower rate. Sources at memory makers suggested that overall DRAM contract prices should drop by an average of 2-3% in the first half of November.
The price drop for DDR2 should slow, as memory makers have adjusted DDR2 capacity and the market should see a reduction in DDR2 supply in November. With oversupply pressure easing, memory makers have thus turned slightly optimistic about pricing trends, and will take decelerating price drop as a positive sign, the sources explained.
iSuppli memory analyst Nam Hyung Kim stated in an EETimes that DDR2 inventory levels among memory makers have reached an average of more than four weeks. However, Kim added that makers have increased their production ratio of DDR, which should help ease DDR2 inventory levels.
However, iSuppli has downgraded its rating on the DRAM market to negative. According to statistics from a Leman Brothers report, global DRAM revenues in September were down 12% on year, at US$2,253 million. In addition, Chang-Gyu Hwang, president of Samsung Electronics semiconductor operations, posted a conservative outlook for DRAM. During a conference call yesterday, Hwang predicted that DRAM prices will only stabilize in the second half of 2006.
The NAND flash sector, on the other hand, is faring much better than the DRAM market in terms of pricing and demand. Market sources indicated that memory trading houses are holding their stocks amid projections of further price ups in the spot market.
With reference to data posted by DRAMeXchange, on November 4 spot prices for NAND flash were 24-29% higher than October contract prices. Observers commented that leading players such as Samsung and Toshiba have been offering price-competitive NAND flash in order to further boost demand, a Commercial Times report quoted. In addition, Apple, which has been enjoying a competitive contract quotations, started pushing memory makers to lower overall prices to other customers, the report noted.
However, with demand expected to pick up for the Christmas season, some memory trading houses are holding more NAND flash inventory with the expectation that spot prices will increase further.
NAND flash price differences (US$)
Spot price (Nov 4)
Contract price (Oct)
Difference
8Gbit
55.2
40.8
26.09%
4Gbit
28.7
20.3
29.27%
2Gbit
15
11.2
25.33%
Source: DRAMeXchange, compiled by DigiTimes.com, November 2005
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