February 18, 2009

Memory market shows signs of life, but at a price

Converge Memory Update

After a horrific 2008, the market is showing some signs of life, but at a price. Last month, Qimonda filed for bankruptcy, but that really was not a surprise. The only surprise was that it took this long to occur. The impact of the announcement was a spike in SDRAM, DDR1 and DDR2 pricing. As reported last month, Converge believes the SDRAM spike is legitimate and will continue through the coming months. The market has been extremely active, with many requests for quotes on PC133 products. Spot market pricing has increased as much as 40% since January 1, and we believe this trend will continue.

However, after a significant jump in spot market pricing, DDR2 prices are beginning to retreat. As the mainstream memory in PCs and notebooks, the demand for DDR2 is simply not sufficient to justify a price increase. At one point, 2 GB PC800 modules were as high as $24, which is about 30% above contract pricing. At this price point, there were no signs of any buyers. The 2 GB modules are back down to $20 and there remains room for prices to come down further.

What to watch for over the coming months

  • NOR flash pricing will increase now that Spansion has filed for bankruptcy and Numonyx continues its attempts to get organized. Many contract manufacturers are expressing concern over the lack of communication with Spansion and lead times being pushed back.
  • NAND flash is also showing signs of rebounding. Part of the cutbacks made by the DRAM manufacturers will ultimately impact the NAND market as well, as the spot market has been active with NAND transactions over the past several weeks.

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