Weak DRAM demand despite temporal DRAM spot price bounce; Branded NAND Flash vendors ranking by sales in 2Q08; PC: Memory demand boost and transition still take time
Published Aug.5, 2008
Weak DRAM demand despite temporal DRAM spot price bounce
DRAM spot pricing has been under correction pressure and consolidating since early July. DRAM supply was sufficient in July. But as demand side senses that supply growth may slow down, a rebound of DDR2 eTT 1Gb price took place and once hit US$1.84 on August 1, close to the highest price in mid July. Yet, the upward momentum did not sustain as transaction was suppressed by the relatively high inventory at module houses, agents and speculators.
1H August contract prices to drop 5%
DRAM contract price stayed flat and had weaken a bit in 2H July. Since many PC system makers have built up their inventory when price started showing an upward trend during late April. Now many OEMs have an inventory level of 4-6 weeks. Despite sales during the upcoming back-to-school season should not be heavily impacted by a weak global economy, the relatively high inventory among OEMs implies that strength of procurement should be whittled down. DRAM contract price is expected to decline by 3-5% in August.
Historical pattern suggests that growing seasonal strength should be seen prior to the upcoming back-to-school season. But given that the growth rate of DT PC slows down and more DRAM is installed per system, upgrade demand has been constrained. Also, the forthcoming Beijing Olympics has eroded DRAM module demand as a stricter importation policy is being enacted.
While some industry players are expecting a demand recovery in September, a meaningful rebound is unlikely as PSC and Rexchip that are migrating to 65nm may again grow overall DRAM supply if their yields gain maturity soon.
Branded NAND Flash vendors ranking by sales in 2Q08
Discouraged by a consistent weak demand for consumer electronics and plunge of consumer confidence index, sales of global branded NAND Flash vendors declined 9.0% QoQ at US$2.90bn in 2Q08. Both ASP and sales volume were on the downhill trend in the quarter. A fundamental demand weakness has also aggravated over supply condition, as evident in the divergent trend of QoQ bit growth (+10%) and ASP (-15%).
Samsung ranked as the largest NAND Flash vendor with a sales amount of US$1.14bn, translating to a market share of 39.4%. Toshiba ranked as the second-largest vendor at a sales amount of US$770mn, translating to a market share of 26.8%. Hynix followed as the third on a sales amount of US$495mn with market share of 17%. And Micron along with Intel took the fourth and fifth place, respectively, with a market share of 8.4% and 6.0%.
Samsung has exposed to a consistent weak ASP pressure as seasonal slow impact intensified. Sales growth of end products such as MP3 player and memory card eroded considerably, down from 1Q's 48% to 2Q's 17%. Also, a relatively high inventory level at channels has also weighed on ASP, as evident in a QoQ sales drop of 11.1 %.
Toshiba's performance has also dampened by a sluggish demand for consumer electronics and exchange loss from Japanese yen. Despite sales volume grew, ASP trend lagged behind affected overall sales. 2Q sales have declined by 9.1% QoQ.
Being the third-largest NAND Flash vendor, Hynix has seen its bit growth dropped by 15% QoQ after executing its capacity trim. However, Hynix still managed to have its market share maintained at 17%. 2Q Sales, meanwhile, have been dropped by 13% QoQ.
Micron and Intel are the two vendors that saw their output steadily growing in 2Q, despite sales either posted a mild growth (Micron +9.9%) or decline (Intel -2.8%) on a fundamental demand weakness and downward-trending ASP. Besides, Numonyx has also seen its sales down by 12.5% QoQ at US$70mn, translating to a market share of 2.4%.
Memory demand boost and transition still take time
Taipei Trade Shows that was hold during July 31-August 4 marks a happy ending, with number of visitors hit record high out of the past 18 years. A review of the showcased notebook shows that memory per box does grow along with platform migration. But as sales of notebook should focus on consumer segment, anticipation of a boost in memory demand or standard migration may be disappointed.
Vendors showcased their new products at the show, with the two CPU big names respectively having their Intel Centrino 2 and AMD Puma officially hitting shelves. Yet, most agencies still focused on clearing old platform products at the show as they are well understand that price is always a fundamental sales indicator.
The mainstream 14- and 15-inch widescreen Santa Rosa notebooks, which priced in the range of US$600-850, were the best-selling items of consumer segment. Most notebooks in this category are equipped with 1GB, as most vendors will bundle another 1GB of memory for sales. For the business segment, the mainstream items, which are equipped with 2 GB, were priced in the range between US$1,000-1,200.
The Centrino 2 14- and 15-inch widescreen notebooks started from a price point of US$1,000 and the mid- to high-end models started from US$1,600. The most high-end versions are priced as much as US$2,000-2,500 or even above. Most new platform notebooks are equipped with 2GB memory, with some even came with 4GB. Most of them are still in DDR2 standard.
A review of the aforementioned specification and ASP shows that transition of notebook platform does help boosting DRAM per box. But given that consumer models will be the sales driver in 2H08 upon a good P/P ratio, memory makers may found their hopes to see platform transition boosting memory fail. |
