Tuesday, May 21, 2013

Mobile memory contract price decline eases as supplies tighten

TAIWAN: According to DRAMeXchange, a research division of TrendForce, given the amount of price growth experienced by PC DRAM since 4Q12, first tiered DRAM suppliers are making an increased effort to slow down their migration to mobile DRAM.

In the second quarter of this year, declines in the mobile DRAM contract prices have eased, and price-competitive mainstream products such as LPDDR2 4Gb, 8Gb, and 16Gb all underwent price drops of less than 10 percent QoQ. For products such as eMCP (eMMC+Multi-Chip Package), the price drops were approximately 7 percent, whereas for MCP, prices slid by roughly 5 percent due to the tightening of the MCP 4+4 supplies resulting from the transitions being made from LPDDR1 to LPDDR2.

Following the increased smartphone sales target set for the second quarter, Samsung reserved an estimated 70 percent of the mobile DRAM capacity for its in-house products, which in turn caused supplies of eMCP to tighten. While the Korean company's actions exerted little impact on the Q2 contract prices of first tiered manufacturing customers, those belonging in the second and third tiers are already beginning to experience problems in the areas of pricing and order supply.

Mainstream density products such as eMCP4+4 and 4+8 both saw price increases of as much as 50 percent, for instance. In addition to the intensified price growth, product supply orders have also become harder to obtain for smartphone makers who do not belong in the first tier. The gradually worsening shortage in May, on the whole, can be said to have created a largely negative impact on the performances of the second and third tiered manufacturers.

In the third quarter, the merger between Micron and Elpida are expected to show further progress. As more and more of the Micron’s eMCP-based products are being delivered to their customers for testing, there is hope that the eMCP shortage situation can be properly resolved during the second half of the year. TrendForce predicts that the price drops will gradually ease as the market's oligopolistic state becomes more obvious.

As the economic scale and number of technological advancements in the industry continue to rise, first-tiered mobile DRAM manufacturers will have a good chance of maintaining their profitability.

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