Speculative buying in Chinese market triggered 20 percent increase in DDR3 2GB spot price

TAIWAN: According to DRAMeXchange, a research department of Trendforce, DDR3 1333 MHz 2Gb spot price surged from $1.83 to $2.03 before closing on Jan. 27th. Second day in Asia, the midday price arrived at $2.24, an impressive accumulated 22 percent increase in two days. On the other hand, DDR3 1333 MHz 1Gb raised 12 percent to $1.18.

The DDR3 spot price in 1Q10 remains relatively high. On April 22nd, 2010, DDR3 1Gb 1333MHz were dealt at $3.02. However, the average price had fallen below $2 on October 12th, 2010 and reached the bottom, $1.05, on January 26th, 2011.

Overall, the DDR3 spot price has accumulatively declined 66 percent from the peak. More specifically, DDR3 2Gb 1333 MHz spot price has dropped from $4.85 to $1.76, a 66 percent price decline over the five month period. The spot price decline seems eased and reached its bottom in January, 2011.

With the upcoming Chinese New Year, Asian spot market included Hong Kong, Taiwan, and Korea will be closed in early February. The need to replenish inventory from the Chinese market has shown a slightly upward trend in spot price on the 25th and the 26th. The indicator of rebound has triggered speculative buying while and provided incentive for vendors to hold on to a portion of their inventories. Thus, this phenomenon leads to a two day 20 percent rocketed climbing in DDR3 2Gb spot price.

The momentum is very strong, we are expecting to see some price fluctuation after the Chinese New Year, but overall price will be going in a steady upward trend.

DRAM contract price is also reaching its bottom, a 20-25 percent increase is expected in 2Q11.

Expecting an explosive growth in Smartphone and tablet PC, and an increasing demand for servers utilized in cloud computing, DRAM vendors have planned to move their capacity to mobile DRAM, server DRAM and foundry business from commodity DRAM.

Commodity DRAM is considered high-risk, because its volatility in price. 2011 DRAM content per box growth is expected to be 30 percent with the launch of Intel Sandy Bridge. DRAM content will be increased from 3GB to 4GB. DRAMeXchange expects as PC OEMs start to replenish their inventory in April DDR3 contract price will increase 20 to 25 percent in second quarter.