1GB contract price leaps 10pc in 1H May

TAIPEI, TAIWAN: According to DRAMeXchange analysts, DRAM makers have finally successfully raised their contract price 3-5 percent in 2HApr followed by another 10 percent in 1HMay, as the DRAM contract market tightens and the DRAM spot price rises significantly.

Given the upcoming back-to-school shopping season, the huge decrease in DRAM capital expenditures, and slow capacity expansion, DRAM makers are optimistically expecting 1GB contract price to continue rising to $23 USD ($2.5 USD/1Gb). Spring time for the DRAM industry has arrived.

After the release of 1Q08 financial results, Hynix has announced only 5 percent shipment bit growth and Qimonda reported a shipment bit growth decline of 9 percent. Inotera also showed a relatively flat QoQ bit growth while transitioning to 70nm process.

Although Elpida Q1 production bit growth increased 33 percent, its DDR2 customers are primarily big module houses, not PC OEMs. Therefore, the low Q108 QoQ bit growth caused DRAM tight supply in contract market.

In addition, the current market condition indicates that DRAM price will soon recover and many buyers will stock up their inventory, which caused market price for DRAM to rise significantly in April. From mid-March to early May, branded DDR2 1Gb 667MHz chip price rose from $1.91 USD to $2.16 USD (an increase of 11.3 percent) and DDR2 667 1Gb eTT rose from $1.6 USD to $2.04 USD (an increase of 27.5 percent).

DRAM spot market remained flat last week with price fluctuating within 1 percent after its significant gain in April.  DDR2 eTT 512Mb and 1Gb prices remain steady at roughly $0.99 USD and $2.02 USD respectively. However, the overall trend in the market continued to be strong with spot prices showing signs of strong base support. Although Elpida/PSC eTT die production continues to increase while Rexchip continues to ramp up, given the increasing market demand, eTT die price rose far more than branded die price did.

According to DRAMeXchange statistics, based on the highest and lowest April spot prices for DDR2 eTT 512Mb and1Gb dies (DDR2 512Mb eTT highest and lowest prices are $1.0 USD and $0.83 and DDR2 1Gb eTT highest and lowest prices are $2.04 USD and $1.68 USD in April), DDR2 eTT 512Mb spot price rose roughly 20.5 percent, while DDR2 eTT 1Gb spot price rose roughly 21.4 percent.

With respect to branded dies, highest and lowest spot price in April for DDR2 667 512Mb dies are $1.01 USD and $0.93 USD, an increase of 8.6 percent, and $2.16 USD and $1.94 USD for DDR2 667 1Gb dies, an increase of 11.3 percent. From a market perspective, the sign that DRAM price has bottomed out and the increased visibility to future market are the main factors that brought the prices back up.