News
 

Bookmark and Share

(3) 

DRAMeXchange, a research division of TrendForce, has reported that contract prices of DDR3 memory showed signs of stabilization the second half of January and did not drop for the first time in many months. According to the researchers, 4GB modules are in greater demand than 2GB modules, which is not really surprising.

DRAM Price in the Second Half of Month Remains Flat

In the second half of January, 2GB DDR3 memory contract price remained flat, with average price at $9.25. However, 4GB deals have already been concluded at a high of $17.25, higher than $17 in the first half of the month, while the average stayed the same at $16.5. This is an indication that 4GB module price growth momentum is stronger than that of 2GB modules, and overall concluded transaction price is noticeably headed towards exceeding average price.

Based on the $17.25 price, 2Gb single chip price costs approximately $0.9. DRAM makers ahead in the the 4Gb transition process are enjoying costs of $1.81 per chip. Basing calculations on the mature 30nm process, production cost just about breaks even, according to TrendForce. At the current stage, DRAM manufacturers’ actual profitability and process migration progress are highly related, and both the shrinking of process technology and the transition to 4Gb single chip production play key roles in profitability.

In terms of the spot market, as the Chinese New Year holiday has just ended, there have been few concluded deals. Average 2Gb spot price is in the $0.94-0.97 range, gradually closing the gap between spot and contract price. Whether spot price will continue to rise, thereby stimulating a contract price increase as well, will not be clear until further evaluation of Chinese New Year sales. However, according to TrendForce research, module makers who play an important role in the spot market are planning to slow inventory restocking to deal with possible DRAM price increases, which will provide substantial support for spot price.

DRAM Supply Price Increase Brewing, Weak Market Demand Remains an Uncertainty

DRAM industry oversupply was severe in 2011, causing long-term, weak DRAM prices. Besides the largest Korean manufacturers who stayed profitable, makers were unable to withstand the prolonged losses and had to react by not only lowering capacity utilization rates and attempting to decrease net cash outflow, but lowering this year’s capex figures as well – an indication of the extent of makers’ difficulties.

Benefitting from Q4 2011 PC DRAM production cuts that amounted to approximately 20% of total capacity, TrendForce expects the DRAM oversupply ratio to improve significantly, decreasing from the original 16% to 10%, the healthiest figure in the past year. DRAM makers are becoming inflexible in terms of price quotes, as stabilizing and gradually increasing DRAM price is understood as a shared industry goal. Many DRAM manufacturers have set a minimum for price quotes, which not only prevents DRAM price from falling further, but encourages buyers to increase purchase volume for each order. Some makers are even actively negotiating with buyers to set shipment volume and price on a quarterly basis. DRAM suppliers are gradually employing more rational policies to deal with price changes, which is expected to have a positive effect on price stability.

However, whether or not the supply-side adjustment is fully effective will depend on support from the demand end. According to TrendForce research, as the market is currently in the slow season and there is a lack of momentum for PC upgrades, total notebook shipment volume is expected to decrease by a considerable 9.7% quarter-over-quarter, likely the lowest quarterly demand for the year. Furthermore, although the market is bubbling with rumors of impending DRAM price increases, in order to save on key component production cost PC OEMs are not likely to increase content per box – instead, they are turning towards the spot market. Affected by the decrease in business days in January, concluded transaction volume was as expected, with purchasing volume low.

As for February, buyers are still biding their time as they are highly concerned about the demand situation. In light of this, currently DRAM makers are continuing their technology migration efforts, but there has been no news of manufacturers increasing capacity utilization rates to increase production. Taking both supply and demand into consideration, there is limited possibility of DRAM price exhibiting a V-shaped curve. DRAM makers are all treading thin ice when it comes to product planning, carefully maintaining price and trying to make it through the weak first quarter to the more optimistic second half of the year.

Tags: DRAM, DDR, Business

Discussion

Comments currently: 3
Discussion started: 01/31/12 06:50:43 PM
Latest comment: 02/01/12 01:02:51 PM
Expand all threads | Collapse all threads

[1-2]

1. 
They over-produced and the PC market went soft like most everything else in the world under the current economic recession that just won't quit until real jobs are created. This could take another five years the way things are going.
0 0 [Posted by: beenthere  | Date: 01/31/12 06:50:43 PM]
Reply
- collapse thread

 
the market only went soft in the north Atlantic region not the rest of the world. e.g USA ans Europe.
0 0 [Posted by: tedstoy  | Date: 02/01/12 01:01:04 AM]
Reply

2. 
Yeah, but those low price are for low performance DDR3 modules. Can you please do a research on how much DDR3 costs from 2133Mhz? You guys will be surprised
1 0 [Posted by: TAViX  | Date: 02/01/12 01:02:51 PM]
Reply

[1-2]

Add your Comment




Related news

Latest News

Monday, April 14, 2014

8:23 am | Microsoft Vows to Release Xbox 360 Emulator for Xbox One. Microsoft Xbox One May Gain Compatibility with Xbox 360 Games

Tuesday, April 1, 2014

10:39 am | Microsoft Reveals Kinect for Windows v2 Hardware. Launch of New Kinect for Windows Approaches

Tuesday, March 25, 2014

1:57 pm | Facebook to Acquire Virtual Reality Pioneer, Oculus VR. Facebook Considers Virtual Reality as Next-Gen Social Platform

1:35 pm | Intel Acquires Maker of Wearable Computing Devices. Basis Science Becomes Fully-Owned Subsidiary of Intel

Monday, March 24, 2014

10:53 pm | Global UHD TV Shipments Total 1.6 Million Units in 2013 – Analysts. China Ahead of the Whole World with 4K TV Adoption

10:40 pm | Crytek to Adopt AMD Mantle Mantle API for CryEngine. Leading Game Developer Adopts AMD Mantle

9:08 pm | Microsoft Unleashes DirectX 12: One API for PCs, Mobile Gadgets and Xbox One. Microsoft Promises Increased Performance, New Features with DirectX 12

3:33 pm | PowerVR Wizard: Imagination Reveals World’s First Ray-Tracing GPU IP for Mobile Devices. Imagination Technologies Brings Ray-Tracing, Hybrid Rendering Modes to Smartphones and Tablets

2:00 pm | Nokia Now Expects to Close Deal with Microsoft in Q2. Sale of Nokia’s Division to Close Next Month