Components | June 29, 2011
DDR3 2Gb eTT price in spot market plummeted 20%
According to DRAMeXchange, PC-OEM’s high DRAM inventory (usually lasts about 4~5 weeks) has caused more conservative attitudes toward purchasing DRAM component, and 2H’June contract prices indicated a continuous downward trend from 1H’June.
DDR3 2GB’s average contract price is USD 17.25 (1Gb USD 0.92) and 4GB is USD 33.5 (2Gb USD 1.94), down by 5.48% and 5.63%, respectively, which resulted in a 8% drop of 2GB contract prices in June. For the spot market, previously impacted by the dumping of downgraded parts has also caused the weakening spot price even on the chips without quality concern. DDR3 2Gb eTT’s spot price in June has plummeted over 20% to USD 1.35 from 1H’s USD 1.66. According to DRAMeXchange, due to PC OEMs' more conservative attitudes toward DRAM component purchasing and their anticipations of continuous price downward trend, the DRAM contract price is more likely to maintain a decline tendency in July. Micron stock price plummeted over 14% during a single trading day, potential off-balance situation on 2 H ’11 DRAM market is emerging Micron published its fiscal 3Q earnings on last Thursday (6/16) and its stock price plummeted 14.6% during after-hour trading section due to its disappointing performance on both revenue and earnings. That is, undoubtedly, a warming to the upcoming DRAM market situation. According to DRAMeXchange, the year-over-year (YoY) bit growth of DRAM supply in 2011 is only 50% which is lower than 2010’s 58%. However, 2011 PC shipment growth is merely 3.9% YoY comparing to 2010’s 15.1%. DRAM’s demand and supply situation in 2H’11 is even gloomier from the negative impacts of the weak PC demand and the disappointing growth of DRAM content per unit in 2H’11. Originally, the anticipation of 2011’s Tablet PC’s popularity and PC shipment performance has been quite optimistic in 1H11. Nonetheless, impacted from the 3.11 Japanese earthquake, global supply chain of IT industry was damaged. Although the majority of the component production has resumed gradually since May, worldwide PC demand is weak. The PC inventory among channels in Europe remains at the peak level; combining with U.S.’ current unemployment rate and China’s economic inflation, the concerns of the PC sales in 2H11 emerge; which resulted in a weaker demand when comparing with previous years. The YoY PC shipment growth has downward-adjusted to 3.9% from originally 5.1% in the beginning of 2011. Meanwhile, in order to stimulate the purchase rate, PC OEMs are offering more competitive pricing which in term has slowed DRAM content per box growth for cost down purpose. The level of contain per unit is estimated to be merely 3.6GB to 3.7GB by the end of 2011; representing a negative influence on the DRAM market. As to the outlook of 2H11, with the assumption that DRAM average selling price (ASP) keeps decreasing, only Korean makers will be remained with competitive advantages. For example, Samsung has commenced its mass production of 35nm; Hynix, on the other hand, is reportedly delivering 38nm customer samples to PC OEMs for qualification; the mass production of 38nm is anticipated to happen in later this year. Regarding Japanese maker Elpida, with the assistance from its subsidiary company Rexchip, aggressively ramps up the portion of advanced node to the total output; producing entirely in 30nm by the end of this year. In the mean time, Powerchip is striving to cultivate non-DRAM foundry business; intending to minimize the impact from unceasing drop of DRAM ASP. As for other DRAM companies, Nanya and Inotera are striving to increase the portion of 42nm migration, and ProMOS is seeking for any possibility to survive through the up-coming DRAM downturn which is considered the most since 2008’s economic recession.
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