DRAM spot price rose 63pc 4Q09; TW wafer-in production likely to hike to peak in 2009

TAIPEI, TAIWAN: Continuously with the strong upward pricing trend from 1H’Jul, both DDR2 and DDR3 spot price hikes to the 12-months record high recently. DDR2 1Gb eTT spot price rose 63 percent to $1.71 in 9/15 from $1.05 in 7/15.

With rebounding DRAM price, Taiwanese DRAM vendors record 10 percent and 19 percent monthly revenue growth for July and August respectively, says DRAMeXchange.

Along with warming global economy, PC-OEMs reveal the positive view toward the PC sales and aggressively replenish inventory due to the Windows 7 effect. Therefore, started from July and benefited from recovering demand, tight DRAM supply strengthens the DRAM price growing momentum and boosts the sales.

Nanya announced the 1-year record high NT$3.7B and this is attributed to not only the upward trendy price but also the recovering utilization rate to 60 percent from Inotera. PSC also recorded NTD$2.6B for August revenue, which is 10-month record high. Other Taiwanese DRAM vendors also have good operation performance. Average monthly revenue growth are 3-10 percent.

Wafer-in production for Taiwanese DRAM vendors increased apparently during past two months due to the rebounding DRAM price that the August production has reached 338K, which is about 86 percent growth compared with the lowest status in February this year. September wafer-in production of PSC will be up to 100K, while utilization rate has been enhanced to 77 percent from 23 percent in 1Q09.

Besides increasing production in DDR2, DDR3 chips have also been produced in small volume. Rexchip also pull back its utilization rate back to full capacity-80K/M. About 15-20 percent of capacity will be scheduled from DDR3 at the year end.

As for Nanya, mass production under 8nm Micron technology in Fab3 has been completed and 50nm technology will be migrated at the year end. Wafer-in production will be scheduled to reach full capacity-20K/M. Wafer-in production of Inotera sharply dropped to 50K/M due to the Qimonda’s bankruptcy that overall wafer-in production in August will reach 100K since Micron will share 50 percent of Inotera’s output in 3Q09.

According to DRAMeXchange, 4Q09 average monthly wafer-in production will be up to 365K for Taiwanese DRAM vendors, which this amount will reach year-high record. The growth rate is about 68 percent compared with the production situation in 1Q09.

Due to the aggressive DDR3 migration for Samsung, Hynix and Elpida, DDR2 output is expected to drop in 4Q09. As for Taiwanese DRAM vendors, besides Nanya and Inotera will still focus on the commodity DRAM, other vendors such as PSC, ProMOS and Winbond will expand their product mix into foundry and specialty DRAM business to lower the exposure in commodity DRAM.

Accordingly, we expect sales and profitability for Taiwanese DRAM vendors will likely be improved in 2H’09, according to DRAMeXchange.