Uncertainties with Elpida's Future Drive Memory Price Up Slightly

DRAM Gets 2.7% More Expensive in Two Weeks: 4GB DDR3 Module Now Costs $19

by Anton Shilov
03/27/2012 | 05:02 PM

Contract prices and spot prices of dynamic random access memory (DRAM) in the second half of March continues to slightly grow as a result of uncertain future of Elpida, according to DRAMeXchange, a research division of TrendForce. While PC OEMs have gradually increased stock levels as a precaution against Elpida’s potential withdrawal from the market, the market is still in situation of oversupply, which keeps spot prices low.

 

DRAM contract price continued to show an uptrend in the second half of March, 2012: a 4GB DDR3 module average price increased by 2.7% to $19, while average price-point of 2GB DDR3 memory module hit $10 mark, a 2.6% increase. From the market perspective, even though the DRAM market is currently in a state of oversupply, PC OEMs have gradually increased stock levels as a precaution against Elpida’s potential withdrawal from the market, while DRAM makers have taken a firm stance on price in hopes of maintaining the uptrend, which has resulted with contract price increase in the second half of March, 2012.

As for the spot market, in contrast to continually rising contract price, from the day Elpida filed for bankruptcy protection, average selling price of DDR3 2Gb 1333MHz chips has been fluctuating around $1 due to sluggish demand, relatively weak buying momentum, and generally low trade volume. This is a result of the fact that Elpida’s supply to the spot market has not decreased significantly, as well as the gradual decline of the spot market, which in past years easily had 20-30% market share, but accounts for only 13% of the DRAM market today. TrendForce indicates it is highly likely contract price will continue to rise in April, although it will still depend on third-place revenue holder Elpida’s next move. All of the above factors will influence the future DRAM price trend.

Facing a post-Elpida era, it is optimal timing for DRAM industry mergers and acquisitions. TrendForce indicates, Korean manufacturers’ combined market share has reached nearly 70% of the global DRAM industry, leaving only 30% for Taiwanese, U.S., and Japanese DRAM makers. The non-Korean makers are unable to compete in terms of economies of scale, technology migration speed and product mix. As a consequence, their losses will only increase, TrendForce believes.