Limited DDR demand seen in PC clone market;"window period"from upcoming Vista launch drags down DDR2 price

The sluggish DDR and DDR2 spot markets caused the DXI to slip from 4600 to the 4549 level. However, amid production cuts from DRAM makers and demand from the PC clone market, future DDR price drops should be limited. For DDR2, the PC market's weak seasonality drove down its market demand. To boost its growth, relevant component prices need to be cut further.

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MICRON Technology Inc, the largest US maker of computer memory chips, has said a collapse in the price of its products has created a "horrible situation" for the company.
Micron increased production of Nand memory chips during an industry glut, said Mike Sadler, the company's head of sales, at an analyst conference in Sun Valley, Idaho. Nand chips store information in digital cameras and MP3 players. The timing "couldn't have been worse," he said.
He forecast prices will fall 30 percent to 40 percent this quarter from the preceding three months, Bloomberg News reported.
Micron, with its partner Intel Corp, is spending US$4 billion this year on building and equipping new plants to produce flash-memory chips for portable electronics. At the same time, existing manufacturers, including Samsung Electronics Co and Toshiba Corp, are increasing output at a rate that's exceeding customers' demand.
"The supply side of the equation is imbalanced due to a lot of supply coming on from Asia," said John Lau, an analyst at Jefferies & Co. "There is a lot of competition out there."
Sadler, who didn't specify the effect of the glut on Micron's earnings, said he doesn't see any new sources of demand emerging this year.
Micron has to stay in the Nand business because it's going to become a large percentage of the semiconductor industry, said Micron Chief Executive Officer Steve Appleton.
"We have to build critical mass in that space," said Appleton.
Last year sales of flash memory jumped eight percent to US$20 billion. That compares with a gain of nine percent for the total chip industry to US$247.7 billion, according to the Semiconductor Industry Association.
Micron's partner Intel plans to introduce new technology that will use flash memory as an alternative to magnetic hard-disk drives for storage in laptop computers.
Prices for Micron's main product - dynamic random access memory chips, or DRAM, which are used in personal computers - also are falling as supply exceeds demand in a weak season for PC sales, Sadler said.
He said that customers aren't willing to take on inventory because they're betting prices will fall further.