New record low for DDR 1GB

DQW Bureau
New Update


Demand for DRAM did not recover after the Beijing Olympics. Memory module

makers, who realize that their expectations have failed, are starting to

initiate price cut in China.

According to DRAMe­Xchange, price of DDR2 1GB eTT dropped by an approximate

of seven percent within single day to $1.51, marking a new record low since Nov

27 (at $1.57). Price of DDR2 1GB eTT declined by 20 percent throughout August.

And the price of branded DDR2 667 1GB has also dropped to new low at $1.65 in

the same period.

Some industry players explained the 10 percent sequential DRAM contract price

drop in 2HAug to a noticeable drop in PC OEM demand. Amid a weak economy trend

and unclear demand visibility for Christmas, PC OEMs have started trimming their

inventory from a six-eight-week amount. Some orders were even said to be

cancelled. DRAM makers thus have no alternative but to lower their price

further. Given that the downward price trend is solid, price should hit bottom

in October.


After seeing a price plummet in early 2007, DRAM makers still fail to see

their ASP rises above cost, despite pricing has shown some temporal rebound or

stability. Thanks to pre-stock procurement among PC OEMs and traders, price

appreciated by more than 20 percent in Q2 2008. Some DRAM makers thus expect to

swing from loss to profit under an anticipation that the upward price trend

would sustain.


Aug 26

Sep 01

change (%)

DDR2 1Gb (128Mx8) 667MGz




DDR2 1Gb (128Mx8) eTT




DDR2 512Mb (64Mx8) 667MHz




DDR2 512Mb (64Mx8) eTT




DDR 512 (64Mx8) 400MHz




DDRMB (64Mx8) eTT




Source: DRAMeXchange

Note: Listed prices were quoted from the latest session on August 26

and September 01 on DRAMeXchange website.

However, spot price later posted a sharp fall in early July, followed by a

weakening contract price trend in late July. While price seems having no upside

catalyst in Q3 2008, inventory clearance pressure is intensifying on an eroding

demand. When more industry players expect a supply trim to drive price upward,

DRAM makers have no way back but to continue expanding and shrinking design

geometry. Therefore, pace of DRAM cost down lags behind ASP erosion.

DRAMeXchange analysts indicate that in addition to increased output from 50nm

generation migration, new camps are also expected to fill the market with fresh

capacity. Nanya, which has forged partnership with Micron, is expected to add an

extra capacity of 30k per month at its Fab 3 during the second phase production.

Fab 2, which is scheduled to remodel as 12-inch fab, will also contribute

another 45k of capacity.

Rexchip also has plans to expand capacity at its R2 to 30k in 2009. Elpida

will also tie-up with UMC and Suzhou Venture Group (SVG) for a 12-inch wafer fab

in China. The aggressive expansion plans imply that oversupply will continue

weighing on DRAM makers' profitability in near term. Under such an industry

trough, a market mechanism will edge out those players with poor cost structure.