DRAM 1HMay contract price: Mainstream 1GB chip jumps by 10%; 1Q08 sales ranking of branded NAND Flash makers
(http://www.dramexchange.com/default.asp DRAM price trend looks quite different compared to last year)
Published May.6, 2008
DRAM 1HMay contract price: Mainstream 1GB chip jumps by 10%
After slowing down on DRAM capacity ramp and yield issue on 66nm, Hynix has announced only 5% shipment bit growth in its Q108 financial result. Meanwhile, Qimonda reported a shipment bit growth decline of 9%. Inotera also showed a relatively flat QoQ bit growth while transitioning to 70nm process. Although Elpida Q1 production bit growth increased 33%, its DDR2 customers are primarily big module houses, not PC OEMs. Therefore, the low Q108 QoQ bit growth caused DRAM supply tight in contract market. In addition, because of the market stipulation that DRAM price will soon recover causing buyers to stock up their inventory, spot market price for DRAM rose significantly in April. From mid-March to early May, branded DDR2 1Gb 667MHz chip price rose from US$1.91 to US$2.16, or an increase of 11.3%, and DDR2 667MHz 1Gb eTT rose from US$1.6 to US$2.04, or an increase of 27.5%.
As contract market for DRAM tightens, spot price for DRAM rose significantly and both DRAM DDR2 512Mb contract and spot price have stayed at less than US$1 for 5 months since early last December, DRAM makers have finally successfully raised contract price 3-5% in late April followed by another 10% in early May. Given the coming back to school shopping season and the huge decrease in DRAM capital expenditures and slow capacity expansion, DRAM makers are optimistically expecting 1GB contract price to continue rising to US$23 (US$2.5/1Gb).
DRAM spot market remained flat lat week with price fluctuating within 1% after its significant gain in April. DDR2 eTT 512Mb and 1Gb prices remain steady at roughly US$0.99 and US$2.02 respectively. However, overall trend in the market continued to be strong with spot prices showing signs of strong base support. Although Elpida/PSC eTT die production continues to increase while Rexchip continues to ramp up, given the increasing market demand, eTT die price rose far more than branded die price did.
According to DRAMeXchange, based on the highest and lowest spot prices in April for DDR2 eTT 512Mb and1Gb dies – DDR2 512Mb eTT highest and lowest prices are US$1.0 and US$0.83, and DDR2 1Gb eTT highest and lowest prices are US$2.04 USD and US$1.68 in April – DDR2 eTT 512Mb spot price rose roughly 20.5% while DDR2 eTT 1Gb spot price rose roughly 21.4%. With respect to branded dies, highest and lowest spot price in April for DDR2 667MHz 512Mb dies are US$1.01 and US$0.93, an increase of 8.6%, and US$2.16 and US$1.94 for DDR2 667MHz 1Gb dies, an increase of 11.3%. From a market perspective, the sign that DRAM price has bottomed out and the increased visibility to future market are the main factors that brought the prices back up.
DRAM makers establish alliances to share resources and enhance competitiveness
Beginning the second half of 2006, because of the over-expansion which led to an over-supplied market, DRAM die price has fallen precipitously to levels so low that, at one time, it approached DRAM makers’ variable cost. After incurring heavy losses for nearly an entire year, in order to continue pursuing further advancement in either process technology or production capacity, DRAM makers began to align into new strategic alliances and partnerships.
Based on current competitive landscape, the largest strategic alliance is the one headed by Elpida and consists of PSC, Rexchip, and a new joint-venture funded by UMC and Elpida. In addition, Elpida and Qimonda will also join hands in an alliance to co-develop new processes for 40nm and below. The next alliance is between Micron, Nanya, and MeiYa; combining Micron’s industry leading die design capability and Nanya + MeiYa’s production capability, this alliance should have a good chance at gaining more overall market share in the future.
In terms of technology, joining an alliance will, regardless of whether it’s in the form of licensing or co-developing, hugely reduce time and cost of new process development and allow DRAM makers to begin mass production earlier. For example, with Elpida’s licensed technology, PSC was able to begin mass production using 65nm process earlier than other Taiwanese DRAM makers and possibly reach break even by end of this year. As far as co-development is concerned, given the accelerating cost of new process development, Micron & Nanya, and Elpida & Qimonda have joined hands to co-develop the next generation process at 50nm and below, because cost for these new researches will likely to be much more staggering than current technologies considering that they may require developing new immersion techniques.
Unless one is as large as the current leader – Samsung – few DRAM makers can afford to develop its own technology independently anymore and will necessarily have to join hands in sharing resources and developing next generation process technologies. Those who are not part of a strategic alliance will face a harsh competitive landscape. We expect ProMOS and Inotera will ultimately choose an alliance best suited to their needs in order to face the next wave of challenges.
1Q08 sales ranking of branded NAND Flash makers
Impacted by the sub-prime mortgage loan aftereffect and the slow season, oversupply of NAND Flash worsened in 1Q08. NAND Flash ASP fell about 35% compared to 4Q07. Although, overall bit shipment grew about 30% compared to 4Q07, aggregate 1Q08 sales of branded NAND Flash makers fell 15.8% QoQ to US$3.24bn.
Ranked by their 1Q08 sales, Samsung continued to lead with Toshiba and Hynix in the second and third spot followed by Micron, Intel, STMicro and Renesas/PSC. The top five NAND Flash branded makers shared 96.8% of the whole market share in 1Q08.
Although NAND Flash market share by sales for Samsung in 1Q08 fell to roughly 39.6% compared to 4Q07, Samsung continues to be the leader in branded market. Despite the increase proportion of 51nm node production, however, affected by the deep decline in NAND Flash price, 1Q08 sales fell 18.7% QoQ to US$1.28bn.
NAND Flash market share by sales for Toshiba rose to 26.4% compared to 4Q07 and continued to be in the second place among branded NAND Flash maker. Because of Toshiba’s successful increase in 56nm node production was able to resist the effect of the NAND Flash price decline, 1Q08 sales were flat compared to 4Q07 at US$855m.
1Q08 market share by sales for Hynix fell to 17.5% though it continued to stay at the number three spot among branded NAND Flash makers. Because Hynix lowered its NAND Flash production, 1Q08 bit shipment increased only 9% QoQ. However, due to the fall of NAND Flash ASP at 39% QoQ, 1Q08 sales for Hynix fell to US$569m, or a decline of 29.1% QoQ.
With the ramp up of 50nm node, Micron & Intel continued to see steady growth in bit shipment in 1Q08. However, impacted by the large decline in NAND Flash price, their 1Q08 sales fell compared to 4Q07. Micron and Intel 1Q08 sales were US$248m and US$181m respectively with a market share of 7.7% and 5.6% each.
Because STMicro primarily produces NAND Flash for cell phone applications, revenue for 1Q08 was not as severely impacted by the price decline. Revenue for STMicro in 1Q08 fell slightly to US$85m, or a slight decline of 6.6% compared to 4Q07. 1Q08 market share by sales was 2.6%. Because Renesas continued to reduce its AG-AND Flash production in 1Q08, Renesas/PSC camp sales fell roughly 60% compared to 4Q07 with a market share of 0.6%.
In the SLC segment, price of 1Gb dropped by 2.7% to US$1.79; 2GB increased by 0.4% to US$2.72; 4Gb fell 2.3% to US$3.74; 8Gb dropped by 0.5% to US$7.59 and 16Gb stayed flat. In the MLC segment, 4Gb dropped by 1.5% to US$1.99; 8Gb dropped by 0.3% to US$3.35; 16Gb dropped by 2.6% to US$5.25; 32Gb dropped by 1.7% to US$11.40 and 64Gb dropped by 1.3% to US$23.62. |
