Home»News»July DRAM contract price sees first dip in 2012

July DRAM contract price sees first dip in 2012

Pinterest Google+

Average 2GB chip price remained around US$11.25. Initially, the peak sales season was expected to stimulate demand in the second half of the year, but currently there is no sign of back-to-school momentum evident in PC OEMs’ monthly shipment figures. Additionally, as manufacturers have not made capacity cuts, TrendForce concludes the oversupply situation will not see improvement anytime soon.Since PC OEMs are all showing high inventory levels, their top priority is to find a way to reduce inventory and mitigate potential losses from the DRAM price decline, likely to continue in the sluggish DRAM market. Suppliers are hoping 4GB price will not fall below the US$20 mark in July.At such figures, even the maker with the most market share would not see profits. If DRAM price continues to fall, another round of capacity cuts is inevitable. Until the industry sees new demand stimulation, supply and demand can only be balanced through supply-side capacity adjustments.Currently, both server and mobile DRAM price are on a downtrend, a reflection of the oversupply situation. DRAM makers’ only option is to cut back on PC DRAM production; it is unlikely other market mechanisms will help ease the price decline. Micron-Elpida merger details emerge, but no help to supply and demand balance as PC DRAM capacity will remain unchanged in near futureMicron and Elpida’s July 2 joint announcement reveals that a total of US$2.5 billion will be used to satisfy the reorganization claims of Elpida’s creditors. Micron will acquire 100 percent of the equity of Elpida for US$750 million, while Micron will pay an additional US$1.75 billion for foundry services provided by Elpida, in the form of future annual installment payments through 2019. Thus, the details of the Micron-Elpida merger are mostly settled.100K Elpida’s Hiroshima fab, Rexchip’s 75K, and Micron and Inotera’s 200K, Powerchip is in talks to license Micron’s sub-20nm process technology for commodity DRAM production, the Micron group is looking at around 400K total capacity, squeezing out SK Hynix for second-place market share.TrendForce indicates, after the merger is complete, production at Elpida’s Hiroshima fab will still be focused on mobile DRAM, and Apple and other tablet PC manufacturers will remain the suppliers’ biggest clients. Rexchip’s output levels will also stay the same; the maker will continue to produce 30nm products, the majority of which will be PC DRAM, for Elpida at fully loaded capacity.Initially, the industry had hoped Micron’s acquisition of Elpida would result in some DRAM capacity withdrawal; with a portion of production reallocated to NAND flash products, DRAM oversupply would see some relief. However, due to the large amount of cash required to make such adjustments and the fact that the NAND flash market outlook for the second half of this year is not as optimistic as initially expected, capacity changes may be delayed.As DRAM industry supply was already slightly in excess for the first half of 2012, factoring in macroeconomic uncertainties for the second half of the year, PC makers have lowered their shipment targets for 2012, which will only serve to exacerbate the oversupply situation.Based on the 2012 PC shipment growth forecast of 3.3%, the PC DRAM yearly sufficiency ratio will be greater than 15%, and the mild price uptrend is unlikely to continue in the second half of the year. If manufacturers remain at the current fully loaded capacity, even if peak sales season and back-to-school demand is satisfactory, it is unlikely 4GB price will exceed the US$21.5 mark again this year.In such a case, PC DRAM price will likely see two divergent trends: manufacturers, such as the Korean suppliers, who produce relatively little PC DRAM will be able to maintain high contract prices as they face little inventory pressure, while makers with higher PC DRAM production ratios will have no choice but to accept low to medium contract prices in order to move inventory.Thus, TrendForce expects the gap between highest and lowest PC DRAM contract prices will expand in the second half of the year.

Electronicsfeed.com is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to Amazon.com. For a full list of the affiliate programs we utilize to help serve unique, ad-free content, take a look at our Advertising Disclosure statement.
Previous post

Competition intensifies as U.S LED bulb price hits new low

Next post

Mouser and Intersil ink distribution deal