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© Elpida Components | September 14, 2011

1HSep. DDR3 2GB contract price flat

The previously falling price trend showed signs of stabilizing in 1HSep. DDR3 2GB contract price stayed flat at an average USD 10.75, while DDR3 4GB ASP fell slightly, by 4.65% to USD 20.5 due to DRAM makers’ attempts to increase shipment volume.
DDR3 2Gb chip price was approximately USD 1.13. From the market perspective, benefitting from production cuts by Japanese and a number of Taiwanese manufacturers, the spot market continually saw price rebounds. While the increases only lasted a few short days at a time, the effects of supply-side production cuts were enough to present the depressed spot market with a chance to recover slightly.

Looking at DDR3 2Gb chips, currently the difference between contract and spot unit price has shrunk to 12%. DRAM makers are all hopeful that this spot market rebound, along with demand from the upcoming peak season, will be reflected in DRAM contract price as well, finally putting an end to the dismal DRAM price trend of the past few months.

Affected by production cuts and traditional peak season demand, DRAM price shows signs of stabilization

Since June, DDR3 2GB contract price has fallen by more than 40% to a low of US$10.5, breaking cash cost for the majority of DRAM makers. Taiwanese DRAM makers are no exception, as they are behind international manufacturers in terms of technology migration.

ProMOS was the first to cut production due to financial difficulties, adjusting their wafer start capacity down to a mere 10K. Powerchip also lowered standard DRAM wafer start volume to less than 50% of original figures. Nanya and Inotera recently followed suit.

Along with production cuts by Japanese and a portion of other international DRAM manufacturers, average wafer start volume decreased from 1H11’s 1300K to approximately 1150K, a reduction of around 12% in terms of wafer start volume. From a price perspective, spot price was first to show signs of steadying.

Some DRAM manufacturers have begun to quote higher spot prices, as spot and contract price currently differ by about 12% and production cuts by Powerchip and Nanya have affected spot market supply. Contract price was also influenced, by traditional peak season demand and the gradual decrease of inventory levels.

PC OEMs’ September inventory restocking has been much better than in the previous few months, causing 2GB contract price to stay flat.

Although the market currently remains in a state of oversupply, production cuts across the board have improved the DRAM oversupply situation and eased the price decline. Furthermore, many DRAM makers are making changes. For instance, many international DRAM makers are aggressively transitioning to server and mobile DRAM markets in order to seize opportunities in newer product categories like cloud applications, smartphones, and tablet PCs.

Taiwanese DRAM manufacturers, on the other hand, are leaning towards foundry and non-DRAM product orders. Consequently, standard DRAM output is expected to gradually decrease, which will hopefully provide positive momentum for future DRAM price trends.

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