Computex Taipei a key indicator for ongoing price trend; Growth of average NAND Flash content per MP3/PMP to bring a 29% QoQ demand bit growth in 2Q08
Published May.27, 2008
DRAM spot pricing flat last week on low transaction volume; Computex Taipei a key indicator for ongoing price trend
DRAM spot price trend did not very much affected by the Hynix China fab power outage incident. Prices generally stayed flat, instead of an expected upward in a noticeable fashion. Despite there still existed appreciation, magnitude of growth was limited. In the eTT segment, prices of 512Mb and 1Gb dropped by a respective 2.9% and 1.0% to US$1.0 and US$1.98 during May 20-26. Whereas for the branded segment, prices of 512Mb 667MHz stayed flat at US$1.04 and 1Gb 667MHz up by a mere 0.9% to US$2.17 in the same period.
Overall transaction volume was low as the week before. Despite contract prices continue trending upward, consumption at the spot market is still being lulled by seasonal slow turn. A meaningful demand pick-up is not going to be seen in near term. The upcoming Computex Taipei electronics tradeshow as scheduled in early June is expected to mark a new page for seasonal demand upturn. The spot market is expected to grow vibrant thereafter.
Contract price likely to appreciate by 5-10% in 1HJune
While Elpida has previously mentioned that contract price will continue trending upward in June, Hynix’s recent fab power outage, should jointly spur contract price to grow stronger in 1HJune. Channel checks show that some customers are informed by Hynix about delivery delay or shipments reduction, meaning influence from the power outage is extending. As Computex Taipei will soon open, a 5-10% appreciation in 1HJune is likely.
Divergent price trend in contract and spot market; Elpida, under transformation
By taking the price of DDR2 667MHz 1Gb as reference, price of branded was already 3.7% higher than eTT on May 26. In light of a gloomy industry outlook, DRAM makers will find their relief if they are able to secure contract customers. Take Elpida for example, it posted a QoQ supply bit growth of 33% in 1Q08. It has extended its business coverage from leading memory module makers to PC OEMs in attempt to further boost its market share.
Elpida’s production for 6F2 DRAM on 65nm is matured at its Hiroshima, Japan site. Where its ally PSC and Rexchip will also move the technology to volume production during 2Q-3Q, with respective capacity allocation for the technology expected to be 70% and ~60% during year-end of 2008.
Elpida vows to be the number-one DRAM supplier. Its ambition takes into action in the form of capacity expansion. Besides the capacity expansion at Rexchip, it also ties up with UMC on foundry business and collaborates with Qimonda on developing next-generation DRAM.
When the entire Elpida group materializes their efforts, those weaker players in the race will see aggravated pressure. But the business reshuffle should promise the industry with a recovery.
Growth of average NAND Flash content per MP3/PMP to bring a 29% QoQ demand bit growth in 2Q08
Shipments of MP3/PMP have declined sharply from 4Q07’s more than 63mn units to 1Q08’s 42.58mn as seasonality weakness lulled consumption. NAND Flash is the key storage media in MP3/PMP, with over 80% of the shipped 45.58mn units adopted NAND Flash. As seasonality weakness should persist in 2Q08, DRAMeXchange estimates that quarterly shipments should stay flat at 41-42mn units in 2Q08.
Nevertheless, as mainstream memory density at MP3/PMP has surpassed 4GB, and more leading vendors have either prepared or launched high-density models (16GB-32GB), average memory content per box is expected to ramp up further to 5-6GB. Thus, the growth is expected to increase 29% QoQ in NAND Flash consumption.
As of 1Q08, Apple still dominates MP3/PMP market with a share of 73%. Other tier-one players in the market include Samsung, SanDisk, Sony, Creative and Philips. Listed are summary of key players’ high-density MP3/PMP offering in 1Q08.
iPod Touch from Apple is the item that draws the most attention among all existing iPod models. Apple has introduced a 32GB model in February. The most impressive feature that iPod Touch delivers is a user-friendly control of multimedia content via the multi-touch technology. The image can also be fluently resized. On the sideline of the 32GB iPod Touch launch, Apple has also reduced price of 1GB iPod Shuffle from US$79 to US$49 and priced the 2GB model at US$79. The adjusted pricing has spurred sales of iPod Shuffle and further boosted Apple’s market share in markets outside the US. Prior to the introduction of the 32GB iPod Touch, SanDisk and Creative have respectively introduced their MP3 player in 32GB density, SansaView and Zen. SansaView also supports a full-motion movie playback function.
In the PMP segment, Samsung has upgraded its P2 and T10 PMPs to support Blue Wave technology in 1Q08, enabling consumers to download extra software online and enhance inter communication with other Bluetooth-compliant devices. Creative has also upgraded its Zen Vision W series PMP to support 30GB and 60GB memory density. By boosting memory density, Zen Vision W could support a 24-hour AV file playback. External CF card slot is also supported for any potential extension. Sony, at the meantime, has also introduced a 16GB MP3 player that can support a 60-hour AV file playback.
2HMay contract price comment
Currently NAND Flash demand is weakened by the traditionally slow season effect. Moreover, downstream vendors either take low stock policy or continue to lower their inventory level. This has led to the mild decrease in total NAND Flash procurement. NAND Flash average contract price of 2HMay either keeps stable or slightly falls reflecting to the weak demand in the market. Hot season demand for NAND Flash is expected to significantly recover in early 3Q08. The price is likely to gradually rebound with more demand in 2H08.
NAND Flash spot price recap, May 19-26
In the SLC segment, price of 1Gb stayed flat at US$1.77; 2Gb up 3.3% to US$2.83; 4Gb down 3.2% to US$3.61; 8Gb down 0.7% to US$6.95 and 16Gb down 0.3% to US$16.35. In the MLC segment, price of 4Gb down 1.6% to US$1.90; 8Gb down 5.2% to US$3.07; 16Gb down 4.2% to US$4.83; 32Gb down 1.3% to US$10.98 and 64Gb down 1.8% to US$22.33.
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