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Components | June 29, 2012

2HJun. DRAM contract price trend stays flat

According to DRAMeXchange, as a result of weak PC demand, the DRAM contract price trend stayed flat in June, bringing an end to the five-month uptrend.
Average 4GB module price remained at US$21.25, while the highest and lowest prices were US$21.5 and US$21, respectively. Industry leader Samsung pushed contract price quotes up to the US$22 mark, but Taiwanese and Japanese DRAM manufacturers’ price quotes were unchanged due to weak market demand and high PC OEM inventory levels.

Although the price trend stayed flat overall, most transactions were concluded at lower prices than in 1HJun. Furthermore, the majority of deals were conducted with Korean DRAM suppliers, as other makers had little room to negotiate and had no choice but to sell at flat or lowered prices in order to move stock.

Looking at the spot market, from the beginning of June up to the present (June 28), 2Gb chip price has fallen by approximately 2%. Low trading volume indicates market demand has still not picked up. 2Q is traditionally the off-peak season, and with DRAM makers continually shrinking process technology, DRAM bit supply growth is approximately 10% for the quarter.

With supply exceeding demand, price negotiations are difficult and the uptrend is unsustainable. A future upturn in PC DRAM price is dependent on the stimulation of PC shipments by back to school demand as well as the consumption of PC OEM inventory levels, which would bring about another DRAM purchase cycle. In the short term, DRAM price is unlikely to rise much, and July contract price will very likely stay flat or decrease.

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