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2009 DRAM Supply Bit Growth is Projected to be a Mere 2.43%; NAND Flash: The Recent Spot Price Trend of Major Chip 16 Gb MLC Remains Strong
Published Mar.31 2009, 15:40 PM (GMT+8)
2009 DRAM supply bit growth is projected to be a mere 2.43%, says DRAMeXchange
Battered by the DRAM downturn over the past two years, most DRAM makers are facing cash sufficiency problems and may default payment due in the short term. Therefore, DRAMeXchange believes some DRAM makers will be forced to maintain low utilization rates of under 50% by end of 2009, resulting in the 2009 DRAM supply bit growth to be only 2.43%, compared to 95% in 2007 and 66% in 2008, says DRAMeXchange.
DRAMeXchange lowers DRAM 2009 supply bit growth estimate from previous 17.82% to 2.43%. The new update is based on our assumption that some DRAM makers will continue to maintain low utilization rates or even conduct more production cuts due to tight cash levels and low DRAM prices.
DRAMeXchange also lowers DRAM 2009 demand bit growth from previous 19.82% to 13.84% due to lower PC shipment growth and content per box growth. The 2.43% supply bit growth should bring the supply below the demand in 2H09 and help the DRAM DDR2 prices move up to the range of $1.2-$1.5 if the inventory reduction goes well.
According to DRAMeXchange’s survey, February DRAM output dropped to 687 Million (1Gb equiv. ), 21% down from the highest level at 867 million (1Gb equiv.) in September 2008. DRAM output should continue to go down further, as some DRAM makers cut more capacity in Jan.- March’09. This indicates that the DRAM market has reached near a balance and should experience a shortage in 2H 2009. However, DRAMeXchange also notices that most PC OEMs, module houses and channel distributors have built up over one month inventory. The inventory will be one issue that could hamper the upward momentum when a possible shortage occurs in 2H09.
The Recent Spot Price Trend of Major Chip 16 Gb MLC Remains Strong
According to the DRAMeXchange market survey results, the NAND Flash vendors all plans to increase their system client shipment portions of high density chips in 2Q09 in order to meet the possible shipment plans of the NAND Flash end application clients in the beginning of 3Q09. Therefore, the memory card and UFD client shipment portions will decrease and this may provide support to the price of mid to low density chips.
The NAND Flash vendors will continue to control output in order to keep driving the chip price up to surpass its chip cost after the effect of quarter-end inventory lowering in March is gone. Since the major process technology portion of the 16 Gb MLC production is migrating from 5x nm to 4x nm in 1H09, the NAND Flash vendors also hope the future contract price can gradually go up and eventually surpass US$ 3.5. It is expected that the 16 Gb MLC price can remain at the current level in the short run with better spot market atmosphere and the adjustment of product mix strategy in 2Q09.
With the rising cost of NAND Flash, down stream clients must gradually increase their end product prices to reflect the uptrend of their average inventory cost. Hence the memory card price could also gradually increase with the rising cost of NAND Flash in the past two months, but the 1Q09 total market demand is still insipid. The down stream clients still hope the NAND Flash makers can increase the price gradually so that the price can be adjusted smoothly from up stream to down stream, buffing the negative effect of slowing content per system growth, and create a win-win result for both up stream and down stream makers.
The contract price of major NAND Flash chip 16Gb MLC sharply declined once close to its variable cost around 1.65 USD in mid December 2008 and forced the NAND Flash vendors to face severe losses. The NAND Flash vendors speeded up retiring 8 inch fab and cut their 12 inch capacities. According to the DRAMeXchange statistics, the capacity cut will result in about 14% QoQ decrease of total NAND Flash wafer production in 1Q09. Although the demand of consumer products significantly decreased in 1Q09, under the circumstances of Hynix’s market share will significantly decrease, Toshiba’s financial structure might need to further improve, and Samsung became more influential to the market supply and pricing trend, the contract price of the 16 Gb MLC went up to US$ 2.46, which was near the cash cost, in 2H January 2009. Market sources said Samsung could not largely deliver some NAND Flash chips in early 1Q09 as they’re improving the yield of its new 42 nm process technology products, and some contract clients might switch some orders to Samsung, therefore Samsung could continue to raise the contract price. The 16 Gb MLC contract price had came up to US$ 3.15 in 2H March.
dramexchange.com
It seems paradox that yield problems translate into higher pricing
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