It is a pretty rare situation lately, when the major topic of the month is not an event or new technology or highlife tendency, but just the prices. Memory prices. Despite all forecasts these prices have been growing up most of the month. Anyway, we have already warned you last month that in the open market the prices of some not very big memory volumes could deviate in either way, which is very typical of the dead season.
We would like to stress that it is not about ungrounded deviations. Of course, there were certain reasons for this price growth. First of all, the i865 based mainboards have finally reached the mass market, which resulted into higher demand for DDR400 on the customers’ side, and at the same time into higher demand for this memory on the resellers’ side. In addition, the SARS epidemic has come to an end, which definitely told positively on the overall market activity.
And this influence was so great that we could notice some market players expressing very long-term optimism saying that by the end of the year DDR400 will make over 70% of the memory chips already. So, the average chip cost will grow and will reach $5 for a 256Mbit chip in the second half of the year. However, this is not an independent analyst who said that but a Powerchip representative, so we could regard this forecast as a desired dream. Although on the other hand, the same Powerchip is not just dreaming out loud but is getting ready for the expected boom. They keep increasing the 300mm wafers production trying to notch 15 thousand wafers per month by the end of the year (now they are producing 4.5 thousand wafers per month).
However, don’t you think that it would be not quite fair to call it a dream? As the prices kept growing all last month, they overcame the bar of $5 for a 256Mbit chip by the end of the month, which means that the growth was more than 30%! Although some skeptics (not the memory makers, of course) tried to calm everyone down by saying that this is a temporary price growth provoked by the growth of stock volumes, which got critically small during the epidemic. Anyway, the manufacturers have no causes for concern, as with the production cost of $3.4-$4 for a 256Mbit chip they will definitely get some revenues and hence can take a short break.
As a result, the PC manufacturers have also increased the purchase amount, which caused a pretty standard outcome: the contract prices also started growing, just like the wholesale prices. Although they grew not so far up, as it had been expected. Instead of 10-15% in the second half of the month, the growth notched only 5-6%. As a result, the price has almost reached $4 for the same 256Mbit DDR chip and both: the memory makers and the PC manufacturers were not very happy with that. The memory makers hoped for a higher price growth, while the PC makers didn’t see any reasons for it at all. Nevertheless, the latter ones will have to put up: the demand in China keeps growing, and they expect this tendency to continue in July, so the prices are most likely to keep growing too next month.