DRAMeXchange expects DDR2 512Mb to hit US$1 level
Posted: Tue Jan 15, 2008 7:18 am
DRAMeXchange expects DDR2 512Mb to hit US$1 level
Taipei, January 15, 2008---According to data from DRAMeXchange, a perfect double bottom in the spot market and a stable contract price trend in 1HJan, which implies that price of branded DDR2 512Mb is likely to head towards US$1 level again.
Starting from Jan 2, 2007, spot price of branded DDR2 512Mb nose dived by 73% to US$1.70 in May 22, 2007. The price later rebounded by 40% to US$2.40 on June 22, 2007, but again posted a consecutive drop of 62% to US$0.92 on November 28. As of December 5, price appreciated 4.3% to US$0.96 and hit record-low again to US$0.91 on December 11. By witnessing spot pricing portraying a complete W-shape, price hit bottom at US$0.92-0.95 over the following three weeks and stabilized thereafter.
In addition, the price trend highlights that price of one DDR2 1Gb die has turned slightly lower than two 512Mb components with less than 1% difference, justifying that demand for 1Gb is considerable in the marketplace, along with marking the mainstream role of 1Gb parts. Reviewing the price premium of 1Gb over two 512Mb, the gap was 37% in Oct 2007 and shrank to 5.1% in Dec 2007. Since producing 1Gb part could save a minimum of US$0.30-0.50 from backend testing and assembling than producing two 512Mb parts, speeding up migration to higher-density chip is thus the most effective way to shrink cost.
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Besides the catalyst that stemmed from a stable DRAM contract price in 1HJan, spot price of DDR2 512Mb is believed to resume to US$1 level in late Jan, as the general consensus about a swell in procurement prior to the upcoming Chinese New Year in early Feb. "If demand is not secure enough to drive price resuming back to US$1 level, we believe the range will be US$0.80-0.95," said DRAMeXchange analysts.
During 2HJan and early Feb, DRAMeXchange estimates that price of DDR2 is very likely to hit US$1-1.20 level as some DRAM makers that are planning for annual facility maintenance implies an output reduction in March, and that demand for PC is expected to post mild growth in March. Of the major DRAM makers in Taiwan, ProMOS is planning for a two-week facility maintenance.
"Price may even surpass US$2.50 level, representing a 35% appreciation over current quotes, if some DRAM makers announce cutting capex or holding production prior to 2Q. For those DRAM makers, who are delivering relatively competitive cost structure, the anticipated price trend will mark a farewell to losses," they added.