TrendForce: Shipment Delays Resulting from Yield Rate Issues Lead to Positive Turnaround for 2H’Nov DRAM Contract Prices

According to DRAMeXchange, a research division of TrendForce, the 2H13 DRAM prices were initially expected to weaken due to SK Hynix's gradual recovery from the fire accident and the sluggish demand in the market. However, with one of the first tier PC DRAM makers experiencing various shipment delays and resorting to other DRAM manufacturers for orders, the 2H'Nov contract prices experienced a positive turnaround. The highest price and average of 4GB mainstream modules have showed an estimated 3% increase and reached US$ 35 and US$ 33, respectively. For the 2GB modules, the prices reached up to as high as US$ 18.5 given the massive reductions in its supply.

Calculating on the basis of the contract price figures, the 4Gb price is estimated at approximately US$ 4.06, which is close to the spot market's US$ 4.25 (11/28 closing price). Looking at December, it is not unlikely for contract prices to remain stable or show slight signs of growth if the yield rate issues and shipment delays continue.

Affected by the Wuxi Plant fire accident, various of the manufacturers' DRAM inventory levels have dropped on a gradual basis; the majority has approximately 3~4 weeks of inventory as of this moment, whereas the more shipment-heavy PC-OEMs' inventory levels are down to approximately 3 weeks. The lowered inventories, all in all, can be said to be the main reason behind the increase in contract prices. With the Wuxi plant expected to make its gradual recovery, later of 1Q14 is projected to be the period during which the DRAM prices will be adjusted and return to pre-accident levels. Given that the manufacturing costs are likely to improve as manufacturers gradually migrate to 25nm technology, the three major DRAM suppliers in the industry should be able to maintain steady profits.