Comparatively Low Spot Price Evokes OEM’s Desire; MID to innovate new Internet surfing demand in the next generation
Published Jun.10, 2008
Comparatively Low Spot Price Evokes OEM’s Desire
Despite a low volume transaction atmosphere persisted last week, spot price of eTT DDR2 appreciated by ~5% after a Korean maker said to have reclaimed those defective DRAM chips from OEM customers. Even without strong actual demand in the spot market right now, industry players generally think this may cause short term impact to the supply. With low downside risk of DRAM price and the upcoming hot season, speculating buying started coming back.
During the week June 3-9, price of eTT 512Mb and 1Gb appreciated by 5.1% and 3.98% each at US$1.03 and US$2.09. In the branded segment, price of 667MHz 512Mb and 667MHz 1Gb each appreciated by 1.96% and 1.41% at US$1.04 and US$2.16.
Regarding contract price, an upward trend is guaranteed, though the upward momentum has been weaken in 1HJune (up by only 2.5% than 2HMay). As sellers are taking strong stance to preserve the upward price trend, many PC OEMs thus negotiated for longer contract term or more volume during May and June. Channel checks show that present inventory level at OEM side is healthy, even with small issues of unexpected supply took places, no serious incentive of OEM’s early large amount procurement has shown.
Consolidations are happening on DRAM vendor side and top PC OEMs are gaining more market share. Both the buy and the sell side are concentrating, certain vendors and buyers are searching for more sources to diverse the risk of dependency. Also with the fact that spot price is still lower than contract price, OEMs increase their procurement base to those suppliers who used to mainly focus on spot customers recently.
History shows that generally a DRAM price uptrend starts with DRAM spot price exceed contract price and takes the lead in the beginning, so called as a golden cross. The present situation of higher contract price may cause by structural change of the DRAM market, as well as the distortion caused by the recent low transaction volume in the spot market. If the future supply-demand follows the expected guidance, under the situation of the growing contract market and the chance of less supply in the spot, we might see spot price perform the golden cross again.
MID to innovate new Internet surfing demand in the next generation
According to a research on consumers’ feedbacks about handset functionality, majority of them expressed discontent. About 58% of consumers think handsets could not fulfill their Internet surfing demand but 48% of them have to obtain updated information via Internet. Also, 41% of them expressed wish to get online anytime and anywhere, with 38% of them are willing to pay about US$20 per month to trade for mobile Internet and 37% of them think Internet access is vital to their daily life. But also 60% of them think handset has its physical limited to Internet access due to the relatively small screen size. Yet, 24% of them think notebook is not an alternative as it is too bulky.
Currently most consumers access Internet via notebook and handset. But the former is not ideal for a high mobility requirement where the later could hardly fulfill requirement due to the physical barrier from screen size. The physical limitations of these two segments thus create a new segment to feed consumers’ demand for a high mobility Internet access environment – MID (mobile Internet Device). Despite the concept of MID has been emerged for a while, a more clear distinction with smart phone has just created.
During a recent Computex Taipei tradeshow, Intel has intensively promoted its MID platform that is powered by Atom processor and Centrino platform. The aggressive push is indeed motivated by a substantial business potential behind MID. There are over 1.3bn of Internet users with each spending about 32 hours to surf Internet per month. Google is available in over 36 languages and the famous social network portal rolls out over 140 new applications per day. About 1bn of Internet users have Internet network society subscriptions and 1.54mn of them will log on to these “societies” every day, translating to 3bn minutes of online time. The number of users using handset to access handsets is expected to hit 4.9mn in 2009 and expand to 5.96mn in 2009 and 1.28bn in 2010. When the number keeps expanding, it highlights the rapidly growing business potential of MID as well.
MID is a market segment in between smart phone and premium smart phone, priced in the range between US$599-799. Basic function on a MID is Internet access, data management and AV file playback, as well as killing dead time via easy access to any kind of social network society. Besides these functions, MID designers have also created proprietary platform for different kinds of information. In this sense, MID also serves as an information exchange media for users to exchange information in a more effective and cost-friendly way.
Most current MIDs are equipped with panels that range from 4.5 to 6 inches. Besides the well-known Windows Vista, MIDs also support Red flag and Linux. MID is actually a device that integrates all Intel key technologies: a 143mmx74mm big SoC that is made of 45nm high-k, supports TdP at 0.6-2.5v only, HD video decode, SDIO, 3D graphics, PCI Express and USB client, all chief communication standards (Wi-Fi/WiMAX/3-3.5G/Bluetooth/GPS) and Centrino platform Menlow. Intel has already planned for the launch of the second MID platform – Moorestown. In addition to the strong hardware support, MID is also likely to be the potential star product as all mobile device hardware and software vendors are all keen on enhancing user experience via advanced functions/designs.
MID adopts SSD as its storage media, with the standard memory density being 2-4GB. When MID market gains stronger momentum, NAND Flash capacity is expected to see a solid filler. After gaining a broad support from HTC and some other major vendors, companies including Inventec, BenQ, Quanta, Compal, ASUS, Elekrobitm, Fujitsu, Gigabyte, Panasonic, Sharp, USI and Clarion have all introduced respective engineering samples during Computex. Many companies from the wireless communication sector have also expressed interest to develop specialize systems. Intel has tied up with Option over Connection Manager, Siano on Mobile TV, Gemtek and Samsung Electro-Mechanics on wireless module for consistent Internet connection. These partnerships have been already acknowledged by leading telecom service carriers including China Mobile, China Unicom, Clearwire, Korea Teleom, NTT DoCoMo, SK Telecom, Sprint, T-Mobile, UQ Communications and Willcom.
The advent of MID has created a brand new customer group that has not been addressed before. Despite it is believed to be a star product if a smooth supply could spur stronger demand, its success very much depends on a friendly Internet connection and cost. Whether vendors could enhance MID’s power efficiency is also a critical challenge. Whereas for consumers, unit price, of course, plays a judging role. The prospect of MID should be positive if vendors could address the mentioned issues in short term.
1H June contract price comment
Mainstream MLC NAND Flash product average contract price of 1H June appears slight fall. Meanwhile, SLC contract price shows relatively stable. Resulting from slow season effect and unclear NAND Flash market outlook, most corporations within the industry keep observing the next step within this market. Demand could be expected after Taipei Computex Exhibition in early June with clearer market picture of 3Q08. NAND Flash price is likely to gradually rebound after June with the coming of traditional hot season demand in 3Q08.
NAND Flash spot price recap, Jun 2-9
In the SLC segment, price of 1Gb stayed flat at US$1.77; 2Gb flat at US$2.80; 4Gb dropped by 2.8% to US$3.42; 8Gb dropped by 1.4% to US$6.80 and 16Gb dropped by 0.2% to US$16.04. In the MLC segment, price of 4Gb stayed flat at US$1.85; 8Gb dropped by 2.2% to US$2.68; 16Gb up by 5.8% to US$4.73; 32Gb dropped by 0.1% to US$10.42 and 64Gb dropped by 2.6% to US$20.05.
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