According to DRAMeXchange, DRAM contract prices in the first half of March maintained their momentum, as most price quotations remain same. Some vendors mildly adjusted prices up 2 to 3% on the DDR3 price that out DDR3 2GB "Low "price and "Average" price consistently locates at US $41.5 and US $43, respectively. DDR3 2GB"High" price rose 4.5% to US $46 from US $44 due to significant supply from Nanya. The DDR2 contract price indicates the flat pattern given the concern on slow supply constraint.

DRAMeXchange indicates that less price downside risk occurred in the second quarter based on the current supply and demand. DRAM vendors will likely continue their positive earnings performance quarter by quarter. Samsung, for example, will maintain its Operating Profit Margin (OPM) at 30%. OPMs of Taiwanese vendors will continue their upward trend with cost down effect.

DRAM price sharply rocketed 30% QoQ in 4Q09. Despite the slow season currently hitting the PC industry, DRAM demand remains on the same level as demand in 4Q09, in line with the inventory built-up issue. Given the aggressive DDR3 transition target at 60% in 1Q10 from 40% in 4Q09, DDR3 market indicates the tight supply that DRAM vendors intend to raise the DDR3 contract price.

However, given the over US $40 DDR3 2GB contract price, the DRAM portion of total BOM cost has surpassed 10% given the standard 4GB spectrum of mainstream NB equipped. In line with the rising component price, PC-OEM makers will not likely increase the content, but will very likely adjust down 3 to 5%. That is, most DRAM vendors agree that the flat price trend will continue DRAM demand growth.

Regarding the spot market, DDR2 prices increased to US $2.5 from US $2.1 given the strong demand from the spot market. DRAMeXchange expects that the DDR2 chip price will remain stable at US $2 to US $2.5 and tabbed US $3 in shortage situation when DDR2 turn to niche products in 2H10.

PC shipments in the first half of 2009 dropped sharply; overall, 2009 shipments declined 0.4% amid the global financial crisis. With the foreseeable corporate replacement effect and satisfactory Windows 7 experience, OEM makers release the aggressive PC shipment forecast toward 2010.

According to DRAMeXchange, 2010 PC shipment growth will be up 15.5% YoY (1% YoY for DT, 26% for regular NB and 27% for Netbook). That is, most PC makers are showing a concern about a DRAM shortage in 2H10 and plant to build up inventory levels in advance. DRAMeXchange survey that 1Q10 DRAM procurement volume is consistent with the same level as in 4Q09 and expected quite strong volume in 2Q10. Average DRAM inventory for PC makers will be adjusted up to 1.5 month from 1 month in 2Q10. It claimed by DRAM vendors that flat DRAM price pattern will be anticipated in 2Q10.

About TrendForce

TrendForce is a global leading provider of market intelligence, in-depth analysis reports and consultant services on major electronics components. Our company consists of four major research divisions--DRAMeXchange, WitsView, LEDinside and ENERGY which  cover the DRAM, NAND Flash, PC, display, LED and "green" energy research sectors  respectively. 

In 2000, the company began to deliver market intelligence services under the name of DRAMeXchange. This includes current business environment, real-time spot trading prices, market trends, capital spending and wafer capacity trends, the impact of DRAM/flash memory products on the market and other relevant PC industry information. For more information, visit www.dramexchange.com.