DRAMeXchange: influence of Hynix’s power outage is extending

[Apoptosis]

DRAMeXchange: influence of Hynix’s power outage is extending; 1HJune spot price would rise 5%-10%.

Taipei, May 27, 2008 – According to DRAMeXchange, spot price trend was not much affected by Hynix’s power outage in China last week (May 20-26). Prices generally stayed flat instead of an expected upward in a noticeable fashion. Although there was appreciation, magnitude of growth was limited. In the eTT segment, prices of 512Mb and 1Gb dropped by a respective 2.9% and 1.0% to US$1.0 and US$1.98 during May 20-26. Whereas for the branded segment, prices of 512Mb 667MHz stayed flat at US$1.04 and 1Gb 667MHz up by a mere 0.9% to US$2.17 in the same period.

DRAMeXchange analysts indicate that overall transaction volume is still low. Despite that contract prices are trending upwards, consumption at the spot market is still being lulled by seasonal slow turn. A meaningful demand pick-up is not going to be seen in near future. The upcoming Computex Taipei electronics tradeshow scheduled in early June is expected to mark a new page for seasonal demand upturn. The spot market is expected to grow vibrant thereafter.

While Elpida has previously mentioned that contract price will continue to trend upwards in June, Hynix’s recent power outage, should jointly spur contract price to grow stronger in 1HJune. Channel checks show that some customers were informed by Hynix about delivery delay or shipments reduction, meaning influence from the power outage is extending. As Computex Taipei will soon open, a 5-10% appreciation in 1HJune is likely to occur.

Divergent price trend in contract and spot market; Elpida, undergoes transformation

According to DRAMeXchange, by taking the price of DDR2 667MHz 1Gb as reference, price of branded DRAM was already 3.7% higher than eTT on May 26. In light of a gloomy industry outlook, DRAM makers will find their relief if they are able to secure contract customers.

Take Elpida for example, it posted a QoQ supply bit growth of 33% in 1Q08. It has extended its business coverage from leading memory module makers to PC OEMs in attempt to further boost its market share.

Elpida’s production for 6F2 DRAM on 65nm is matured at Hiroshima of Japan. Where its ally PSC and Rexchip will also move the technology to volume production during 2Q-3Q, with respective capacity allocation for the technology expected to be 70% and ~60% during year-end of 2008.

Elpida vows to be the leading DRAM supplier. Its ambition takes into action in the form of capacity expansion. Besides the capacity expansion at Rexchip, it also ties up with UMC on foundry business and collaborates with Qimonda on developing next-generation DRAM.

When the entire Elpida group materializes their efforts, those weaker players in the race will see aggravated pressure. But the business reshuffle should promise the industry with a recovery.