10-05-2006, 07:34 PM
Join Date: Jul 22 2004
Location: Brisbane, Australia
Well DDR2 was in the past globally in shortage due to reduction in production by the big memory manufacturers in the past 12 months. But that should change soon with DDR2 price drops. Remember those high end enthusiast DDR2 probably will still have a premium due to cost of hand testing and validation.
From one of my contacts
DDR2 exposes under enlarged price fall risk:
According to DRAMeXchange, Cyclical downturn on PC demand prolonged the trough of DRAM spot pricings. Over the week Mar21-27, DDR continued managing to have a stronger counter power over price drops than DDR2. The relatively strong DDR price trend should persist in expense of the anticipated enlarged price drop of DDR2 over the coming weeks.
Price of DDR 512Mb 64Mbx8 400MHz grew by a slight US$0.04 to US$3.87, reflecting the solid demand for high-density chips from module makers. DDR 256Mb 32Mbx8 400MHz stayed flat at US$2.02-2.03 while the same specification uTT(eTT) chips also stabilized at US$1.71-1.72. Industry players estimated that the price fall of uTT(eTT) chips should be limited in the future despite the upcoming slow season demand.
Prices of DDR2 remained weak last week with non-major-brand (NMB)512Mb 64Mbx8 533Mhz DDR2 leading the price drops at 6.18% to US$3.64. The same specification branded DDR2 chips also dropped by 1.8% to US$4.84.
Although the price difference between the same-density 512Mb DDR 64Mbx8 400MHz and DDR2 64Mbx8 still stays at 25% on limited transaction volume of the later chips, DRAMeXchange foresees that the price difference will narrow down over the coming weeks with DDR2 exposing to larger price drop pressures.
Technology advancement aggravates 2Gb and 4Gb NAND Flash prices slumped by over 63%:
Spot prices of NAND Flash edged down further in the last week of March amid the quarterly financial pressures. The over 50% average price slump of NAND through year to date has spurred bundling demand from consumer electronics (memory cards, USB Flash drive, MP3P, etc.) and gift market.
DRAMeXchange indicates that 2Gb and 4Gb are the two density of chips that encountered the bleakest price falls and the prices of these two chips had nose dived by an average of 63% while other densities chips had also plummet by a minimum of 43%. The deteriorating price dips are now come along with the overage of these two parts. The over 50% price drops through year to date interprets that consumers spending the same quantity of budget could now enjoy a double growth of NAND density in compare with early this year. A consumer whom bought a 2Gb part in Jan could have now gets a 4Gb instead with the same amount of money.
On top of the considerable overage of the mentioned parts, DRAMeXchange also observes the production transition for these two densities' chips production on 90nm, 70nm and 60nm processes. DRAMeXchange notices that some new comers start producing 4Gb on MLC architecture. With the multiple choices on available 2Gb and 4Gb parts, required time for customer qualifications takes longer. Under this concern, some producers only subscribe some of their products for validation, which in turns limit these goods' applications and drag prices drop further.
For the week Mar21-27, price falls of 1Gb, 8Gb and 16Gb showed minimizing dropping signs at a drop range of 3-5% only on normalizing market equilibrium. Demand for these parts were mostly came from the bundling demand from consumer electronics and gift markets with mainstream density stays at 128MB(1Gb). Memory density at retail market is now migrating to 1GB(8Gb) and above.
Moving ahead to 2Q, DRAMeXchange is still doubtful about any price rebound under the current technology advancement trend. Unless any killer application appears and digest the rapid growing NAND capacity, prices should still place under shadows.
PC market watch: Shrinking margins prompts Dell to seek for "kickback" from OEMs:
Kevin Rollins, CEO of Dell, admitted that the company's revenues setback in 2Q and 3Q of 2005 was a reflection of the failure of pricing strategies, rather than the direct-sales mode that the company has long established. DRAMeXchange believes that the PC giant did make its fatal mistake in attempt to swing its first revenues setback. When Dell discovered that the sales of low-priced PCs trended revenues opposite to what it estimated in 2Q, it shifted its focus on high-end models in the following quarter. However, the positive impact on this shift was minimal due to the relative limited market size of high-end PCs market, for this reason, it unable to prevent the problem that revenues setback continuously.
In line with the retarded revenues of Dell, the 60-70% sales growth of Acer PCs at China has shaken the confidence to Dell's direct sales mode. Tracking the history of Dell, its solid foothold that established throughout the past two decades is built on its success establishment of direct-sales mode. The six worldwide assembling plants, as well as the consideration of another assembling plant at Xiamen China, prove that Dell still hold confidence to its sales mode.
Although Dell pulled its revenues back on positive track in 4Q05, it still trimmed down its 1Q06 revenues forecast to 6-9% ?the first time that posted quarterly revenues growth to single digit. DRAMeXchange believes there are two major reasons behind this conservative revenues forecast: 1, Dell places its focus on emerging markets deployment in 1Q06 like the establishment of a logisics center at Malaysia in Jan06. As shipment concentrated on low-priced models, the associated growth momentum to revenues should be limited. 2, The entire market for mid-range and high-end PCs are temporary put on hold as consumers are mostly await for the anticipated price cuts of Intel's dual-core CPU platforms.
Dell requests "discount" to preserve margins:
In order to cope with the negative impacts from slowing-down revenues growth, Dell is reportedly requesting its OEM partners to pay 3% of their revenues in order to win the contract orders for 2007. Although the contract orders for 2007 had been settled, the delay Intel's new Centrino Santa Rosa to May 07 had prompted Dell to reshuffle its product deployment, thus offering it the bargaining power to negotiate with its OEMs.
DRAMeXchange regards the direct sales business model and the price negotiating room from barebones are the two major factors that grant Dell the power to negotiate a more price-competitive deal.
Dell, that has long been benefit with low cost from its direct sales mode, offers more flexible price negotiation room with OEMs in the past. However, as low-priced PCs are now growing its significance at the overall PC market, the shrink of margins has prompted Dell to seek for solutions to maintain its margins to a certain level.
In addition to margin concern, PC OEMs that enjoy relative flexible margins also allows Dell to voice out the request. Since most PCs are order in barebones without key components and OEM source components from their associated partners, these OEMs could have enjoyed a relatively higher margin than shipping "complete-system". Dell observes this flexible margins room that PC OEMs could have enjoyed and seek for "contribution" accordingly.
Although the "discount" negotiation is not settled yet, it is certain that PC OEMs have to counter with a potential drop of margins in expense of massive shipment growth and the positive impact over share prices. With the average net margins of notebook production only stay at 2-3%, any OEMs that confront with the negotiation will have to face stiff challenge on margins and the ranking of these OEMs should have re order accordingly.
SDRAM industry overview:
Although SDRAM is closely tie with DRAM industry, its application on consumer electronics goods rather than PC, distinct it from standard DRAM in terms of features and standards. Different densities SDRAM house their respective uniqueness of demand and supply scenario. Buoyed from the escalating density growth from consumer electronics goods, demand for SDRAM has been picking up rapidly. This is the part one of a two-part overview of SDRAM industry.
Purpose of SDRAM:
Speciality SDRAM refers to all non-standard DRAM including SDRAM and EDO that apply in PC. SDRAM is now widely adopted by consumer electronics goods for storing instructions and program codes as the mainstream memory standard demand for PCs has now migrated to DDR 400Mhz or DDR2 533Mhz. Although the market size of SDRAM is not as considerable as commodity memory Ics, the market nature itself diversifies with a variety of product mixture. The core frequency and density of SDRAM are also vary along with the difference of application designs with certain level of design-in supplements required.
SDRAM are mostly adopted by PC peripherals and consume electronics including digital cameras, DVD/VCD players, modems, ADSL applications, set top boxes (STBs), LCD applications, etc (see Chart 1).
Hard disk drive (HDD) is the chief demand driver for SDRAM with a market size of 50 million SDRAM chips demanded per year. SDRAM performs as a buffer memory at HDDs and the mainstream density of SDRAM embedded at HDD is 16Mb(1Mbx16). The growing popularity of SATA interface and high density (like 60-80GB) HDD have also stimulated demand for 64Mb(4Mbx16).
Optical drives are usually embedded with 16Mb SDRAM as buffer memory. The rising market share of integrated graphics pushes discrete graphics to advance with more high-end features, thus, it is now rare to see graphics adopt with only 256-512Mb SDRAM. The mainstream graphics cards are now equipping with GDDR and GDDR2.
The density of SDRAM at DVD players is divergent in terms of different market segments of DVD players. For those DVD players which only equip with basic functions and target for emerging markets, the mainstream SDRAM density is 16Mb(1Mbx16) and 64Mb(4Mbx16); while for those high-end DVD players, they have shifted to embed with DDR.
Entry-level digital cameras still adopt 64Mb(2Mbx32) and 128Mb(8Mbx16). For those digital cameras which support over 5-megapixel and above resolution rate, the equipped SDRAM density have migrated to 256Mb(16Mbx16) DDR.
STBs usually support embedded 64Mb(4Mbx16) or 128Mb(8Mbx16) SDRAM. As the demand for image management grows, mainstream SDRAM at STBs are now migrating to 128Mb(8Mbx16) or 256Mb(16Mbx16) DDR.
LCD TV usually requires 3-7 SDRAM or DDR chips according to the size of the TV. The picking-up demand for higher resolution rate and image transference have now advanced the embedded memory from SDRAM to DDR with density of 4Mbx32, 8Mbx16 and 16Mbx16.
The application of SDRAM varies to fairly different directions at PC peripherals and consumer electronics goods. For PC peripherals, component costs are inevitably under cost-down pressure due to the complete maturity of PC. Demand for low-density SDRAM like 16Mb and 64Mb keep growing stably along with the shipments growth of PC peripherals.
For higher-density 128Mb and 256Mb SDRAM, they are mostly adopted by consumer electronics. However, consumer electronics suppliers are now trending to adopt DDR than SDRAM as the cost difference between these two types of memory is limited. Chipmakers that are reluctant to produce SDRAM has edged cost of SDRAM similar to DDR (Chart 2) or even higher than DDR (Chart 3).
Industry Spot Light News:
Hynix has lost a patent infringement case brought by Japan? Toshiba in a Tokyo court, Reuters reported Friday. The news agency quoted a Toshiba spokesman as saying the court ordered Hynix to halt sales of Flash memory chips in Japan and pay damages to his company, but he declined to reveal the amount of damages. The Japanese chipmaker filed the suit against Hynix for violating the Flash memory chip patent at the Tokyo District Court.
DRAM makers including Powerchip Semiconductor Corporation (PSC) and Nanya Technology have posted bullish outlooks for DRAM pricing trends, stating that the current pricing setback is temporary and that the market should rebound by June as the PC market moves into the hot season, according to the companies.PSC projects DRAM contract prices will stay flat in April and drop slightly in May amid seasonal effects, according to company chairman Frank Huang. Prices will rebound in June as demand picks up.Nanya echoed the sentiment, with company spokesperson and vice president of global sales & marketing Pei-lin Pai indicating that DRAM supply will run ahead of demand in April and prices will stay flat in May amid a cyclical downturn. However, with more dual-core Napa products hitting the market in the middle of the year, as well as the release of Microsoft? new Vista operating system (OS) and AMD? DDR2-supporting CPUs, the second half of this year will see a pickup in demand, he noted. The company even raised its DDR2 contract prices by 10% in March, Pai was cited by a Chinese-language Commercial Times report as saying.Inotera also shares similar views and expect the DRAM industry to stay healthy through 2008, according to company president Charles Kao. By checking the production roadmaps among makers, Kao commented that fellow players have regulated the supply/demand balance well. Strong consumer electronics demand should also benefit the DRAM market, he added.