Contract and spot market pricing suffers significant declines

AMSTERDAM, THE NETHERLANDS: According to Converge Market Insights, the past four weeks have not been sympathetic to the DRAM market, with both contract and spot market pricing suffering significant declines.

During this time span, prices for 1 GB and 2 GB PC800 modules dropped roughly 20 percent in the spot market. Modules with 1 GB declined from $16.50 to as low as $13.20 at one point, and 2 GB modules declined from $37 to $30.

The majority of the product available in the spot market has been from Samsung. Meanwhile, domestic memory vendors have refrained from taking on additional inventory due to the price volatility and supply saturation in the Asian market. As of the second week in September, the spot market is still approximately 10 percent below direct pricing, even after the latest round of contract negotiations.

Converge believes that the market has bottomed out. Due to rapid price declines, the market has not had time to settle. We believe that pricing should stabilize for 1 GB and 2 GB PC800 modules in the $14 to $15 and $31 to $32 ranges, respectively.

As October draws closer, there should be a slight rebound in pricing. With the severity of price declines since July, we anticipate that DRAM manufacturers will try to counter these record-low prices by slowing down production and reducing supply. Additionally, October and November are generally busy production months, so they should help further stabilize the DRAM price freefall.