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Technology Stocks : Applied Materials No-Politics Thread (AMAT) -- Ignore unavailable to you. Want to Upgrade?

To: Proud_Infidel who wrote (6679)	8/8/2003 8:27:11 AM
From: Proud_Infidel	Read Replies (1) \| Respond to of 25522

DRAM Bulletin: Is price rise on the up and up? Disappointing June shipments cast doubt on market optimism by Nam Hyung Kim, iSuppli Semiconductor Business News 08/08/2003, 6:38 AM ET The following column was provided by Nam Hyung Kim, a senior analyst with iSuppli Corp., an El Segundo, Calif.-based market research firm. After a one-week break, DRAM prices on the U.S. spot memory market have resumed their rise, as optimism over a second-half recovery eclipsed concerns over weak shipments in June. DRAM prices on the U.S. spot memory market this week rose for most parts, led by a 6 percent increase for 256Mbit Double Data Rate 266 (DDR266) SDRAM. DDR333 prices in the 256Mbit density increased by 4 percent. Pricing for several DRAM part types had declined the week before. DRAM megabit shipments in June grew by only 2 percent from May, according to World Semiconductor Trade Statistics. Such growth is far below historical levels for the month. For example, in the boom years of 1999 and 2000, June DRAM megabit shipments rose 10 percent and 13 percent respectively. Even in the disastrous year that was 2001, DRAM megabit shipments rose by 34 percent in June. In tepid 2002, DRAM megabit shipments rose by 23 percent for the month. The June results represent a disappointment for the DRAM market. The fact that sales rose only marginally indicates that there was no quarter-end inventory clearance among suppliers, an event that typically occurs at the end of June. This supports iSuppli's view that the driving factor behind rising prices in June was not an actual increase in demand, but expectations of future growth and a slowing in the increase of supply. Despite the June gloom, optimism over an expected second-half market recovery remains the major factor driving DRAM pricing trends. This optimism continues to spur spot market traders and distributors to build their DRAM inventories. Spot-market DRAM prices now have been on the rise for more than two months. However, these price increases are not stopping traders from continuing to buy DRAM. The increase in contract prices in August offered a positive signal to the spot market and traders now are willing to take on greater risk and build more inventory. Since June, inventory in the channel has built up significantly. However, traders continue to buy more DRAM in order to realize profits as prices rise in the near future. A look at demand trends reveals some encouraging signs. Taiwanese motherboard shipments are on the rise, following normal seasonal trends. Furthermore, Intel Corp.'s new 865 PC core logic chipset, which supports dual-channel, Dual Inline Memory Modules (DIMMs), has expanded their market share up to 40 percent of the motherboards shipped by the major manufacturers in August. This is helping to spur DRAM demand. iSuppli expects that DRAM contract prices will continue to increase until the end of August. However, after that point, conditions could change. If distributors and traders begin to liquidate their inventory in September, the channel could become flooded with DRAM. Furthermore, PC OEMs already are feeling a margin squeeze due to increased DRAM and LCD prices. In response to decreased margins, the PC OEMs soon could begin resisting further price increases. As always, the major factor determining DRAM pricing is end demand. All parts of the electronics supply chain will be closely watching the back-to-school season to see how much demand is generated.