DRAM prices to bottom out soon, says DRAMeXchange

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2007-05-30 08:56

Taipei--(뉴스와이어)--With prices already below the manufacturing costs, major DRAM makers have expressed an unwillingness to cut their prices further in clearing out their excess inventory. Current market observations show the DDR2 chip price possibly bottoming out. If this occurs, it should drive up the chip demand, and spur a rebound in the spot price, says DRAMeXchange.

Last week, DDR2 eTT chips leapt 12.5%, hitting a weekly high of USD 1.65. On May 23rd, it experienced a daily price jump reaching 10%. This helped increase the branded chip price 2.3% to USD 1.75, resulting in much stronger market transactions in the DRAM spot market. Despite the fact that Taiwan DRAM makers posted a gross profit of nearly 50% in 4Q06, and 30% in 1Q07, DRAMeXchange believes the persisting DRAM price declines in May will cause them to post a loss in 2Q07.

Although DRAM makers must still ship their chips in May, they indicated no additional price cuts would be made, due to the continuing losses. Prices have thus started to increase for last week. Yet, the end market demand is not expected to pick up in May and June, and PC shipments have been performing worse than expected in May, in the wake of a weak seasonality. Furthermore, PC OEMs, major spot market buyers, and module houses still have inventory levels lasting for more than a month. DRAMeXchange believes that by only relying on buyers in purchasing cheaper chips, the DRAM price increase will be limited at least before June.

With prices already dangerously low, Hynix has already started to switch some of its DRAM production to NAND Flash instead. It is expected that Hynix's output in June will experience a slight decline, and in July, DDR2 output will decrease by 10%~20%. This has prompted the market to hold a more optimistic view for a DDR2 price increase in 3Q07. As DRAM makers are unwilling to yield to more price cuts, and with spot prices increasing, contract prices in June stand a strong chance of stabilizing.

DSCs are expected to remain as a major NAND Flash application for the time being

Among the various NAND Flash application products, digital still cameras or DSCs, were once the biggest consumer of Flash. However, amid the rise of multimedia cell phones, and Flash-employed MP3 players spurred by Apple's iPod success, the Flash consumption ratio from DSCs has gradually declined.

In January, Japan's Camera & Imaging Product Association or CIPA, performed an annual DSC shipment forecast between 2007~2009. For 2007, shipment figures for Japan-made DSCs are projected to reach 84.87 million, an annual growth rate of only 7.5%.

As Japan-made DSCs account for roughly 80% of the global DSC market, the DSC market appears to be encountering a weaker momentum for 2007. Nevertheless, by the end of 1Q07, Japan's DSC shipments grew 16% YoY to roughly 17.94 million, an indication that the DSC market is not experiencing any serious slowdown. DRAMeXchange believes there is still a 10% DSC market growth in 2007. With DSC makers developing new DSC functions and further improving the image resolution,DRAMeXchange also believes that the NAND Flash consumption ratio by DSCs should stay at above 20%. All in all, DSCs are expected to remain as a major NAND Flash application for the time being.

More information on DRAM/NAND Flash markets is available on DRAMeXchange's web site at http://www.dramexchange.com/market/flashpricec_show.asp.

About DRAMeXchange

DRAMeXchange is a global leading provider of market intelligence, in-depth analysis reports and consultant services on major electronics components. Our company consists of 2 major research divisions---DRAMeXchange and WitsView, which cover the DRAM, NAND Flash, PC and display research sectors. You can learn more about DRAMeXchange by visiting www.dramexchange.com.

In the year 2000, the company started to deliver market intelligence services under the name of DRAMeXchange technology. This included the current business environment, real-time spot trading prices, market trends, capital spending and wafer capacity trends, the impact of DRAM/flash memory products on the market, and other relevant PC industry information.

To further expand its research, DRAMeXchange acquired LCD research institute WitsView in 2006 to provide insights on the display industry.

WitsView is a subsidiary brand of DRAMeXchange, which provides prompt and credible market insights covering the quantitative pricing trend for both TFT-LCD panels and finished goods, industry updates and market intelligence. Founded in 2004, WitsView Technology Corporation is made up of a group of sophisticated industry analysts with years of experience, providing objective and strategic insights on the display industry. Additional information can be found at www.witsview.com.

웹사이트: http://www.DRAMeXchange.com