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DRAMeXchange estimates NAND Flash supply bit growth to reach 149% YoY

4 August 2008 Semiconductors

Taipei, July 22, 2008 --- According to DRAMeXchange, curbed by extended impact from subprime crisis, inflation pressure and China’s natural disaster, influence of a seasonality downturn for NAND Flash-based end-applications, such as handset, MP3 player and memory card, is intensified from mid 2Q, resulting in an aggravated glut in the supply chain. Owing to intensified weakness, influence of Hynix’s output trim as announced in early April, has been offset. Therefore, NAND Flash price has dropped over 20% MoM in June when companies see growing pressure during quarter end on a consistent sluggish demand, despite pricing has once posted a mild bounce in April.

So far most major NAND Flash vendors have no amendments to their bit production growth plans in 2008. DRAMeXchange therefore estimates that NAND Flash supply bit growth to reach 149% YoY this year. Given that seasonality upturn impact should be weaker than earlier and possible turnaround will only start exerting influence after mid 3Q, the observed glut should persist in the quarter.

DRAM spot price: Lusterless demand trend to be consistent

After hitting the price bottom at US$1.87 during late 2007, spot price of 1Gb DDR2 667 has enjoyed a consistent upward trend thereafter. As of May 28, an appreciation of 22% has been seen. Quote still hold firm at US$2.01 mark on July 9 but it has trended downward to US$1.97 on July 21.

DRAMeXchange points out that spot price has dropped by about 1-2% during July 15-21, implying no obvious improvement has been seen in demand. As the Beijing Olympics is opening soon, stricter crackdown of illegal electronics component in China has discouraged demand in July. Even if a rebound arrives in August, shrinking demand form Europe may somehow offset it. Also, major memory module houses and distributors are still housing an inventory of more than 30 days. It is expected that a lusterless demand trend to persist in 2H08 with a meaningful rebound unlikely to emerge.

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