With the continuous output reduction started in September, the amount of reduction will reach the peak in January 2009. We expect the over supply situation will be eased starting from the end of Q109. Therefore, the DRAM price may have a chance to rebound at the end of Q209 or in Q309 with the rising demand of PC OEMs.

Due to the 20 percent price drop in September and October, the DRAM prices are mostly now under the cash cost of vendors. Plus DRAM vendors have been suffering from loss for one and a half year, the operation of DRAM vendors is now in difficulty. While the average price may fall 20-30 percent in Q408, if the low price lasts to Q109, at least two DRAM vendors are very possible to be driven out of the market. No matter reduction or getting out of the market, DRAM industry has entered the final death match.

The DRAM capacity must adjust until the equilibrium of supply and demand has been reached. DRAMeXchange expects that the DRAM average price will go back to 1.5 to 2.0 USD/1 Gb early as 2Q09 or late as 2H09.

However, if the governments of Germany, Korea, Japan and Taiwan offer relief funds to DRAM companies to survive through the downturn, the downturn could be extended to 2010.