2H’July contract price for DDR3 rose 9pc to $24

TAIPEI, TAIWAN: According to DRAMeXchange, resulting from the 5 percent upward pricing in term 1H’July, DDR3 contract price for 2H’July hikes again due to tight DDR3 supply and aggressiveness in inventory replenishment for PC-OEMs.

Most DDR3 2GB price deal are negotiated at $24, while Samsung’s pricing was sustained at $22/2GB in 1H’July and was adjusted to $24/2GB in 2H’July.

“Low” price of DDR3 2GB rose 9 percent to $24, and the “Average” price just merely increased to $24.5 from $24, but not much deal was done for "High" price.

The main reason for upward pricing trend is triggered by higher premium on extra DDR3 requirement for PC-OEMs. It is indicated that PC-OEMs pay 7 percent premium on the extra volumes. 2H’July DDR2 contract “Low” price and “Average” price rose around 5 percent since DRAM vendors applied “bundle-sales” strategy to promote DDR2 along with DDR3 despite of weak demand in DDR2 market.

Unlike the boosting upward trend in contract market, DDR3 1333Mhz 1Gb chip rose 9 percent to $1.7 from $1.56 at 1H’July in the spot market given the rare DDR3 supply in the spot market. DDR2 still remains the main transaction target and DDR3 exposure is less than 1 percent among the product mix of module houses.

According to DRAMeXchange's analysts, the boosting demand for DDR3 is triggered by aggressive DDR3 migration of Acer. It is estimated that around 70 percent of notebook shipments in Q4 will be equipped with DDR3 modules.

Acer looks forward to take advantage of DDR3 migration to achieve higher market share in terms of PC shipments. HP and Dell are forced to raise the DDR3 exposure in 2H’09 in advance to protect their leadership even though they plan to adopt DDR3 in mainstream NB market next year. It resulted in the huge demand for DDR3 in 2H’09.

However, DRAM vendors are cautious toward the DDR3 migration since they don’t want to record bigger loss again with anxious migration plans. Therefore, DDR3 contract price rose 14 percent in July due to tight DDR3 supply.

It is indicated that around 30 percent ~70 percent PC models in Q4’09 will be equipped with DDR3, while DRAM vendors are required to speed up the migration process by PC-OEMs.

Korean vendors such as Samsung and Hynix demonstrate their competitiveness in terms of migration speed and production capability. Not only with penetration in 50nm technology, Samsung and Hynix will adopt 40nm technology to produce DDR3 in 2H’10.

DDR3 will be amounted 35 percent ~40 percent in terms of wafer-in production in Q4’09. On the other hand, Elpida is much aggressive toward DDR3 compared with Korean vendors. DDR3 wafer-in production portion will be estimated as 50 percent of total DDR2 production along with DDR3 in Q4’09.

To enhance the competitiveness during the periods without 50nm technology, Elpida is developing 60nm technology to produce DDR3 chip that production volume will raise 20 percent under 60nm technology without immersion facility. As for Taiwanese vendors, Nanya/Inotera currently apply Qimonda’s 70nm technology to produce DDR3 while Micron’s 68nm technology and 50nm technology will be mainly adopted to produce DDR3 followed by the migration plans in 2H’09.

That is, DDR3 portion in Fab 3A will be obtained to 90% if Micron’s technology is applied in 90 percent of total production in Fab 3A. Rexchip ramp up DDR3 production in small volume while PSC will decide to follow depends on the spot market status.

Global DDR3 Migration Trend (Percentage of commodity DRAM production)Source: DRAMeXchange, July 2009