Global DRAM supply bit growth 50 percent in FY08

TAIPEI, TAIWAN: Following a short-lived price rebound of eTT chips to US$1.17 as recorded on October 22, the closed price of US$1.05 on October 29 marked a 10.2 percent sequential drop on a weekly basis.

Swell of eTT chips supply, conservative consumption among marketers, intensifying financial pressure during the later part of each month, as well as the fresh eTT supply that did not ease completely, are the major factors for the downward price trend, DRAMeXchange explained.

Contrasting to the price rally as seen in the spot market, price of branded chips was not affected much with only a 5.8 percent drop recorded. Citing present inventory level at memory module makers and PC makers, DRAMeXchange expects a further price drop in DRAM contract price in November, but the magnitude should be weaker thereafter.

DRAMeXchange estimates that PC shipments should drop by 5 percent QoQ in 4Q07 due to sub-prime woes and demand weakness. Where DRAM makers seem reaching no consensus for expansion trim, DRAM contract price may subject to further drop in November. But as the magnitude of drop is already strong in October, DRAM makers who tend more conservative about price adjustment should limit the drop in December.

Regarding the capex in DRAM industry, DRAMeXchange estimates that DRAM makers should have their capex trims by about 20-25 percent YoY in FY08, meaning expansion on 12-inch wafer fabrication will slow down.

In Taiwan, the key fresh contributors will be Nanya, ProMOS and Rexchip. Whereas, for the overseas vendors, fresh capacity will mainly come from 70nm or more advanced nodes. Although the two Korea giants noted that they have no expansion plan for FY08, Samsung still guides a 70 percent YoY bit growth.

DRAMeXchange foresees that global DRAM supply bit growth to be 50 percent in FY08, versus the demand bit growth of 40 percent in the same period.

The 2HOct NAND Flash contract prices declined roughly by 0-10 percent, as the intention of purchasing more chips weakens. Meanwhile, downstream clients are aggressively cutting the prices of their end-products, in order to further lower their current inventory levels before the forthcoming year-end hot season.

Thus, for October, the pull-in effect from downstream clients has not been as strong. 8Gb and above MLC chips declined more sharply than other NAND Flash chips, due to an increased production output via the 5X nm process technology from major NAND Flash suppliers.

However, the market expects the inventory level and year-end demand of downstream clients to improve in November. The NAND Flash contract price thus could become more stable in November.