DRAM price continues to weaken

DRAM

Most Commented

Unified Communication for your Biz

Improve your contact center performance. See how you can make a difference.

Watch Now

Reach the ICT Community

Engage and build your ICT audience with CIOL online advertising.

Know more

DRAM price continues to weaken

If cutbacks proceed as scheduled, worldwide DRAM production may reduce by 5-6 percent around end of October to November

Thursday, October 02, 2008

Email This

Print This

Comments

RSS

TAIPEI, TAIWAN: DRAM makers such as PSC, Elpida, and Hynix have separately announced production cutbacks on September 8th , 9th , and 18th. If the cutbacks proceed as scheduled, we expect to see a reduction in worldwide DRAM production by 5-6 percent around end of October to November.

Spot market was encouraged, rose from 1.32 USD on September 8 to 1.4 USD on September 10 for an increase of 6 percent, initially when the first cutback was announced. However, the rebound was short-lived; by September 11, price on spot market began to fall again.

After the last announcement of cutback from Hynix, spot price failed to continue the rise with the average price increasing slightly by 0.01 USD, and then weakened by the continued slow demand. Overall, spot market demand continued to weaken in September in spite of announcements of the production cutback.

Contract price fell precipitously in 2H September with average selling price of 1GB SO-DIMM 667MHz dropping by 15.6percent, the biggest decline seen in the past six months. Economic recession has begun to spread from US to Europe and emerging markets in 3Q08.

Branded PC makers, with higher exposure in European markets, continued to lower their shipment target and reduced their DRAM purchase. In addition, previously accumulated DRAM inventory level at these branded PC makers continued to remain relatively high, which resulted in even lower demand in the contract market. Buyers now are with stronger bargaining power.

Taken together, contract price continued to fall under these unfavorable conditions. In addition, given the economic condition, several branded PC makers have turned more conservative about the original, much hoped for Christmas shopping season in Q4 which added even more downward pressure for the October and November DRAM contract price.

Contract price (in USD) from May-Sep 2008
Source: DRAMeXchange

Given that the effects from the production cutbacks will not materialize roughly for another month, short term contract and spot prices is unlikely to increase given the present weak demand.

Although short term price is supported at current level given that cash cost of a single DDR2 1Gb die is roughly 1.3 to 1.5 USD, unless other DRAM makers follow suit and cut back production, DRAM price will continue to fall with the production cost improvement or the weakening demand. Supply reduction is the only way to see a recovery of DRAM price given the current DRAM market.

©CIOL Bureau

Would you like to on this article?

Be first to comment on this article

Name
Email
Your reply

Intuit Money Manager set to make India debut

Windows 7: Should CIOs migrate?

Is China speaking English to beat Indian IT?

Obama visit arouses mistrust among China netizens

I have never used Twitter: Obama

TSMC dismisses reports on SMIC intervention

Bright days for high-end microprocessor cards

Sand 9 goes strong with its MEMS

Tanner EDA ties up with TowerJazz

Sale of Altis likely soon

	Simplify Business Management. ERP solutions by IBM
	Carry your Dream, Convey your Value with ZTE
	A fault tolerant server to reduce your TCO

	A must attend event for IT Professionals
	How to make your enterprise productive
	Unified Communication can impact business. Know how

	Making Web3.0 a Reality!
	CIOL Enterprise Next :What's NEXT in IT? :
	Decrease Total System Costs With Cyclone IV FPGAs

	Reach your desired Target Audience and realize high ROI
	Effective ways of Customer Acquisition through Demand Generation
	Reach 2,500 potential Enterprise Customers!