DDR2 close to variable cost and rebound expected soon
Posted: Tue Dec 04, 2007 7:47 am
DRAMeXchange sees DDR2 close to variable cost and expects to rebound in the near future
Taipei, December 4, 2007---Last week (Nov/26-Dec/3), DDR2 512Mb eTT spot price dropped 1.2% to US$0.80; DDR2 1Gb eTT closed at US$1.61, down by 1.8%; DDR2 1Gb price slipped to US$1.96, down by 2.41%. It should be noted that the DDR2 512Mb eTT price had once fell below the US$0.80 level to US$0.77, but soon returned above the US$0.80. DRAMeXchange foresees that the DDR2 512Mb eTT chip price will be flat or slightly trend upwards.
Amid the persisting DRAM spot prices declines, signs of a price rebound has finally appeared. The following is a chart compiled by DRAMeXchange in showing the occurrences of drastic DRAM price declines.
Year Mainstream Main reason
1998 SDRAM 16Mb 8” wafer factory expanded too excessive, causing the supply significantly exceeding the demand
2001 SDRAM 128Mb 911 event and bubble economy, resulting in the demand to drop rapidly
2007 DD2 512Mb Vista effect isn’t as hot as expected, demand of DRAM grows milder, and too much production output from 12” wafer fab causes DRAM price to drop continuously
According to DRAMeXchange, the price drop can be attributed to many reasons. Nevertheless, a probable price rebound may occur as the DRAM prices slip below the variable costs. This comes in the wake of manufacturers adjusting their production plans based on the changing market conditions. For example, the DRAM price dropped to US$0.8 in 1998 Q2, and then surged back to the US$2.0 level during the next quarter. For Nov01, it dropped to US$0.8, but eventually rebounded back to average of US$2.42 . Based on these two events, it can be seen that the price changes were spurred by major international DRAM makers scaling back on their production volume in an attempt to bring the market demand and supply to a more balanced state.
Beginning from 2006, the DDR2 price has already dropped from US$7.0 to US$0.77. However, it has returned to the US$0.82 level. By looking at the current market dynamics, market observers believe it has already reached the variable cost level, prompting major DRAM manufacturers to reduce their production volume in spurring prices to to rise in the not-too-distant future. If prices do indeed begin climb upwards, a strong price rebound may be seen.
About DRAMeXchange
DRAMeXchangeDRAMeXchange is a global leading provider of market intelligence, in-depth analysis reports and consultant services on major electronics components. Our company consists of 2 major research divisions---DRAMeXchange and WitsView, which cover the DRAM, NAND Flash, PC and display research sectors. You can learn more about DRAMeXchange by visiting http://www.dramexchange.com.
In the year 2000, the company started to deliver market intelligence services under the name of DRAMeXchange technology. This included the current business environment, real-time spot trading prices, market trends, capital spending and wafer capacity trends, the impact of DRAM/flash memory products on the market, and other relevant PC industry information.
To further expand its research, DRAMeXchange acquired LCD research institute WitsView in 2006 to provide insights on the display industry.
