DRAMeXchange: Contract price is reaching the bottom, 20%-25% price rebound is foreseeable by 2Q11

DRAMeXchange: Contract price is reaching the bottom, 20%-25% price rebound is foreseeable by 2Q11

Jan. 21st, 2011--According to DRAMeXchange, the research department of Trendforce, 1H’Jan. contract price is reaching the bottom. DDR3 2GB “Average” contract price is US$17 while U$16 for “Low” contract price. The declining degree is narrowed to 5%-6% from 10% in previous term. 2H’Jan. contract price is still under negotiation that we expect price will remain stable of mildly decline. With the launch of Sandy Bridge in early January, better acceptance of 64bit operation system and low memory price, new model content will be up to 4GB or above accordingly. PC-OEMs will initiate stocking inventory level at 1Q11 end and early 2Q11, which will likely result in the rebounding 20%-25 DRAM price.

In spot market, DDR2 and DDR3 indicates the stale trend that DDR3 1Gb is recorded at US$0.84 and US$1.35 for DDR2. Due to the continuous downward trend, module house and retail channel are conservative toward the market and maintain the low inventory level. With the coming Chines New Year, it is expected to trigger another momentum for inventory replenishment and spot price.

2011 TWN DRAM vendors’ outlook and challenge

According to our 3Q10 DRAM market share survey, shares of Korean vendors are already up to 61.2% while Samsung has exceeded over 40%. With the threat from Korean vendors, TWN DRAM vendors aggressively implement technology migration or business diversification on specialty DRAM. We have summarized the strategies below:

Elpida Group-PSC and Rexchip:
PSC will continue strengthen the volume on foundry on non-DRAM business. 45nm products are in major production while 2Gb chip will be settled down for 63nm nodes at the purpose of comprehensive 2Gb output in 2H11. Rexchip has fully migrated to 45nm in 1Q11 and will trail run on 38nm in mid-February, which outperformed other TWN DRAM vendors in 3xnm migration. It is expected 38nm portion will surpass 50% by the year end while 32nm product will be in trail run as well.

Micron Group-Nanya and Inotera:
50nm yield rate is stabilized at 75%-80% and output is aggressively enhanced at December last year. 42nm production seems fair and portion is expected to surge after mid-2011.

Specialty DRAM-Winbond:
Winbond is the good example of specialty DRAM diversification among TWN DRAM vendors. Besides the specialty DRAM and mobile DRAM, NOR Flash proportion is also pulled up significantly and ready for 65nm nodes.

Market mechanism is positive to DRAM industry

DRAM vendors always sharply increase CAPEX to expand capacity during recovering path. They still continue producing trend at the purpose of cost facing declining price pressure and loss. That is, DRAM price is unable to recover and result in the bigger lost. However, DRAM vendors are struggling again after 3 years loss from 2007 to 2009. DRAMeXchange expect DRAM vendors will be more disciplined on CAPEX without the external assistance from Government. Market mechanism will force those cost-inferior vendors to speed up on strategy reformation. That is, we expect some DRAM vendors will make the significant strategic planning to re-shape on the DRAM industry in this year.