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DRAMeXchange: Outperformed DRAM demand in slow season expected high level in 2Q10

10 March 2010 Semiconductors

Mar. 10th,2010------According to DRAMeXchange, 1H’Mar. DRAM contract price still contain its momentum that most price quotation remains same. Some vendors mildly adjust up 2%-3% 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 the significant supply from Nanya. DDR2 contract price indicates the flat pattern given the concern on slow supply constraint. 
DRAMeXchange indicate that less price downside risk happen in 2Q based on the current supply&demand. DRAM vendors will likely continue their positive earnings performance quarter by quarter. Samsung, for example, will maintain its OPM (Operating Profit Margin) in 30%. OPM of Taiwanese vendors will continue its upward trend with cost down effect.
DRAM price sharply rockets 30% QoQ in 4Q09. Despite of the slow season that PC industry lies in, DRAM demand still consists with 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 DDR3 contract price recently.
However, given the over US$40 DDR3 2GB contract price, 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 unlikely increase the content but will very likely to adjust down 3%-5%. That is, most DRAM vendors agree on the flat price trend to continue DRAM demand growth.
Regarding to spot market, DDR2 price rises to US$2.5 from US$2.1 given the strong demand from spot market. We DRAMeXchange expect DDR2 chip price will stably remain at the range of US$2-US2.5 and tabbed US$3 in shortage situation when DDR2 turn to the niche products in 2H10.
1H09 PC shipment dropped sharply that overall 2009 shipment 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, 27% for Netbook). That is, most PC makers show the concern about DRAM shortage in 2H10 and build up inventory level in advance in 1H10. 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.

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