TrendForce：Price Momentum Continues in 1H'Jan, 4GB Module Price Growth Exceeds 10%

According to DRAMeXchange, a research division of TrendForce, similar to the situation in 2HDec, the gradual production cuts from two of Korea’s major PC DRAM manufacturers are expected to continue to stimulate prices; even though early quarter demand has not been very noticeable, with the supply situation from PC OEMs being less and less stable, module contract prices have continued to embark on an uptrend. Mainstream 4GB DRAM prices have risen to as high as $17.5 USD, an increase of above 7%, whereas 2GB module prices rose by over 10% and approached the $10.25 USD mark. In the short term, the rising momentum is expected to stay strong, with prices likely to reach $18 USD during the second half of the month or even climb to $20 USD at a certain point. Like the contract market, the spot market for DRAM shows equally positive signs: 2Gb prices have reached $1.19 USD by now, growing by over 13%.

From the demand perspective, TrendForce estimates that beginning 2013, Notebook shipments will decline by approximately 13.3% from the previous quarter. Aside from the Chinese regions, other markets have yet to witness any obvious indications of channel replenishment demand. With Intel's newest processor, Haswell, set to be released during Q2, and with short term demand appearing to be going on a relatively sluggish trend, the DRAM price rebound can be said to be mostly attributable to adjustments that are being made from the supply side.

DRAM Market to Become an Oligopoly; Prices go on a Gradual Uptrend

Since Micron won the takeover bid for Elpida during May 8, 2012, the two companies have been become close strategic partners, and plan to take the merge efforts a notch further during 2013. Taiwanese DRAM makers, meanwhile, are taking gradual steps to stop the production of PC DRAM in order to avoid incurring further losses. With Micron joining the two major Korean DRAM manufacturers in the industry, the DRAM landscape will soon transform from what was initially a perfectly competitive market into an oligopoly. The supply-based adjustments that follow will help give rise to a supply-and-demand balance, in turn minimizing any possible price drops caused by market oversupply.

Moving into the first quarter of 2013, even with the persistence of sluggish demand, prices in both the contract and spot markets have rebounded thanks to early anticipation towards the DRAM market's oligopoly transformation. With regards to the sufficiency ratio, assuming that the Korean manufacturers' strategies to reduce PC DRAM production remains unchanged, and supposing that the Taiwanese DRAM makers are still sticking to their original plans of exiting the industry, the DRAM supply shipments—provided that demand begins to pick up— is likely to show gradual signs of tightening. This trend, along with the production shortages arising from the transitions made to mobile DRAM, is likely to continue to support the upward pricing momentum. Anticipating this scenario, various PC OEMs have taken efforts to replenish inventory since 4Q12, which in turn helped spark the pricing uptrend early on. This outcome was predicted by TrendForce in one of last year's articles, “Market Supply-Demand Balance to Return as Industry Gradually Becomes an Oligopoly; Prices Expected to Reach Stable and Profitable Levels.”