DDR3 2GB contract price stays flat for 2HSep

The status of the spot market has affected contract price negotiations for 2HSep., and DDR3 2GB contract price has held onto USD 10.50 pricing. DDR3 4GB contract price has fallen below the USD 20 threshold, decreasing by 4.88% to USD 19.50 due to DRAM makers’ actively pushing this density into mainstream specifications. From the market perspective, since contract price showed signs of stabilization in 1HSep., the spot market looks as if it the downward price trend has nearly bottomed out; consequently, buyers are eager to purchase. Furthermore, with increased demand from China’s upcoming October 1 National Day, the spot market is seeing a fresh wave of inventory replenishment, resulting in a nearly 20% increase in spot chip price. As for contract price, affected by the invigorated spot market, PC OEMs’ relatively low inventory levels, and inventory replenishment in September, DRAM makers kept price quotes flat. DDR3 2GB module price stayed flat, while DDR3 4GB price decreased slightly, as part of DRAM makers’ strategy, in order to stimulate overall shipment volume. TrendForce expects notebook content per box to gradually increase, arriving at 3.7GB per unit in Q4, a 5.8% QoQ increase. As the market currently remains in a state of oversupply, whether or not DRAM price will continue to experience such momentum will depend on future market demand. Increased Demand from Ultrabooks and Cloud Applications, DDR3 4Gb Chips May Become Mainstream in 2012 While DDR3 2Gb chips are the DRAM market mainstream in 2011, with the rise of ultrabooks and cloud applications in 2012, DRAM makers are already expecting strong demand for DDR3 4Gb and have consequently accelerated the transition to the higher density chips. From a product perspective, 11 and 13-inch ultrabook models have a thickness requirement of 18-21 mm. Thus, due to space limitations makers must transition from SODIMM to on-board modules, and 2Gb chips must be abandoned for 4Gb chips. Furthermore, as PC OEMs are all focusing on ultrabook products for 2012, demand for 4Gb chips will rise markedly. As for cloud applications, although server shipment estimates show steady growth, has an opportunity to experience remarkable growth due to increased demand from cloud applications. RDIMM specifications will gradually transition to 32GB or higher, from the current 8GB and 16GB mainstream. Demand for 4Gb chips is even stronger from the server market, and as server DRAM products are more profitable, DRAM makers are all fighting to gain footing in this market. As for DRAM manufacturers’ DDR3 4Gb development schedules, Korean makers are leading the pack as usual. Samsung began mass production in Q2, and Hynix plans to do so at the end of Q4. Since Korean manufacturers have over 60% market share in the server segment, early DDR3 4Gb chips will be mainly shipped for server use. Chips for ultrabooks are currently in the qualification stage. With regard to Japanese makers, Elpida has aggressive ultrabook supply plans, and some models already use Elpida’s DDR3 4Gb chips. Furthermore, as subsidiary Rexchip will enter DDR3 4Gb mass production in Q4, the Japanese team’s capacity will increase significantly in 1H12. Micron has shown steady growth on the server market; the 30nm node process is currently in the testing phase and expected to begin mass production in 1H12. Nanya and Winbond are on the same schedule as Micron. As all DRAM makers are eagerly transitioning to DDR3 4Gb production, TrendForce expects the higher density chip to become the mainstream specification in 2H12. However, the rate at which manufacturers make the switch and the quality of their chips are key factors that will determine makers’ profitability.