DRAM contract price stays flat in 1HJul; single-digit price appreciation for cheaper parts likely; NAND Flash demand to recover in mid 3Q
Published Jul.15, 2008
Price of DDR2 eTT 1Gb to secure at US$1.80 mark, despite a consistent price drop since July
DRAM transaction and pricing were being discouraged after price of DDR2 eTT (both 512Mb and 1Gb) posted a sharp decline during July 7-11. DRAMeXchange records that prices of 512Mb and 1Gb have been dropped by 6.2% and 5.6%, respectively, during July 1-15. In the branded segment, prices of 512Mb 667MHz and 1Gb have been also dropped by 2.9% and 5.9%, respectively, in the same period.
DRAM price and transaction are weak due to a gloomy economy, stricter probe actions over DRAM smuggling in China prior to the Beijing Olympics and consistent expansion at Rexchip. But noted that prices of 512Mb and 1Gb DDR2 eTT should be secured at US$0.90 and US$1.80 mark despite price of these chips once dropped to US$0.83 and US$1.78 last week. The immediate transaction once prices touched these levels has justified our statement.
DRAM contract price stays flat in 1HJul; single-digit price appreciation for cheaper parts likely
Contract prices of 1GB and 2GB DDR2 667 maintain flat at US$22 and US$44, respectively, in 1HJuly, marking a rest to the consistent upward price trend since April. Yet, there still exist a price premium as high as 19% (Contract price of 1Gb DDR2 667 at US$2.38/die vs spot price of US$2), a divergent price trend is still remained between the two market places.
Price negotiation between DRAM suppliers and PC OEMs has taken one more week as both sides did not reach a consensus over pricing because: 1. A Korean vendor has settled a month-long pricing in late May, with the settled prices 10% cheaper than average; 2, PC OEMs have started building up inventory from 2Q with some even having their inventory turnover staying at 6-8 weeks level.
Despite prices of most settled deals maintain flat, the Korean vendor that has settled a month-long contract before, still unable to raise its quotes. We therefore think price of cheaper parts likely to see a 5% increase in 2HJuly, with overall pricing to maintain flat.
NAND Flash pricing records temporal stability, demand to recover in mid 3Q
NAND Flash spot price had either dropped slightly or remained stable over the week of July 7 to 14 as demand fades at quarter-end and is not fully in effect to the market so far. As for supply, there’s no significant change currently.
Prices for mainstream 16Gb MLC chips were at the range between US$3.97 and US$4.20 and 8Gb MLC chips were between US$2.38 and US$2.27. Though prices continue to slide, the erosion is now moderating slightly.
Demand for the end-application continues to be lackluster. Handsets, DSC, MP3/PMP shipments are trending down while UFD shipments are picking up. Weak shipments of handsets and DSCs, which together accounted for 50% of memory card demand, also slowed down the overall memory card momentum. The increasing MP3-enabled phones also cannibalized the MP3/PMP market, especially in the emerging countries. Low cost PC shipment is also being revised down to 8mn units.
We expect the inventory build cycle to begin in mid-3Q to prepare for back-to-school and Christmas holidays demand. Although demand may be weaker on a yearly basis, it may still be enough to stabilize NAND Flash price trend in 3Q. Additionally, the strong debut of 3G iPhone, which features attractive pricing, can improve sentiment and help stabilize NAND Flash price in 2H08. Forecast for iPhone shipments in 2H08 ranges between 10 to 12mn units. Therefore, we expect NAND Flash price to gradually rebound around late 3Q. |
