December 16, 2009

Price decline in 2GB DDR2

Converge Memory Update.

For the first time in over eight months we are starting to see some softness in the DRAM market. The DDR3 market remains stable, but the DDR2 market is showing some signs of weakness. In both SO-DIMM and desktop, 2GB PC800 DDR2 has dropped from the low-to-mid-$50s range to high $40s in a two-week span. This is the first time since March that we have seen a price decline in 2GB DDR2. This decline in the spot market price seems to support why the DRAM manufacturers were unable to negotiate any further price increases in the contract market for the past two contracts. The tier one PC manufacturers are reporting that they have been receiving supplies of DDR2 from their direct channels over the last two weeks. With the upcoming holidays at the end of the month, it's not uncommon to see the memory market soften as we work our way through December.

Converge believes that the memory spot market price for DDR2 will continue to drop slightly between now and the beginning of January. However, we believe that the drop will be minimal and not anything drastic. With the spot market having been 20%-40% above contract for several months now, we are looking for the DDR2 market to drop to or slightly above contract for both 1GB and 2GB PC800.

The DDR3 market should remain stable throughout the remainder of the month. Demand for DDR3 is still strong, and Converge believes it will continue to increase as we head into the New Year.

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