May 13, 2009

DRAM market volatility on the horizon

Converge Memory Update.

Over the last several weeks, there has been a lot of uncertainty in the memory market as DRAM manufacturers attempt to cut supply from reaching the spot market. These tactics are intended to raise prices to justify a substantial increase in contract prices for the first half of May, which will settle 10%–12% higher. Spot market pricing has also gone up over a two-week span. Prices for 1 GB PC800 modules have risen from $9.50 to $11.00 and for 2 GB PC800 modules from $19 to a high of $22 as of May 8.

Although there are some signs of product tightening, Converge believes that the next four to six weeks will be extremely volatile in the DRAM market. The games will continue between the DRAM manufacturers and end users as they try to gauge what the true supply situation will be heading into the next two months. Converge believes that the next three weeks in particular could produce significant swings in the spot market for both price and supply. There is a holiday in the United States, Hong Kong and Taiwan during the last week of May, which could affect supply and demand. Vendors may look to position themselves a little earlier than normal for the month end, which could have a negative impact on price. If that is the case, we should see more supply in the market for month’s end.

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