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Continuous DRAM tight supply will likely attain strong DDR2/DDR3 1Gb pricing trend to September

9 April 2010 Semiconductors

Apr 9th,2010-----According to DRAMeXchange, given the aggressive demand from PC-OEMs, 1H’Apr. contract price still remains strong upward momentum that DDR3 is up 7% to US$46 while DDR2 is up 5% to US$42. From the market status, DRAM demand in 1Q10 and expected 2Q10 will be sustain the high level same as the peak in 4Q09. However, since DRAM vendors still work on technology migration, which resulted in the limited supply. Also, the strong demand for mobile DRAM will also cannibalize the output from commodity DRAM. Currently we heard the view that DRAM vendors will likely adjust up contract price 5%-10% before 3Q10 if aggregate demand surpasses the aggregate supply.

However, PC-OEMs mildly reduce the content on the cost concern and will likely largely adopt content reduction strategy with the continuous rocketing price trend. DRAM vendors generally take the view that price will be negotiated by the market supply&demand while price will be likely going up if demand surpasses supply. DRAM contract price will have higher chance to remain flat given the consideration on DRAM content concern that we DRAMeXchange expect DRAM contract price will likely adjust up 5%-10% before 3Q10.

In spot market, module houses intend to rise up the DDR2 inventory level given the sharply decline DDR 2 supply and DDR2 spot price maintain at the level above US$3. According to DRAM vendors, output for spot market will be sharply reduced that module houses will find it difficult to acquire enough DRAM chips. That is, spot price will remain strong “above-contract-price” pricing momentum with the shortage impact.


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