January 13, 2010

Demand for SDRAM PC133 material is strong and supply is weak

Converge Memory Update.
2010 begins with strong demand in all categoriesAfter two straight years of negative news, poor sales and low average selling prices, there's finally some good news to talk about in the DRAM market. 2009 brought a rebound sooner than many expected, and the positive news is that it looks like it's here to stay for a while. The spot market was active during the last six months of 2009, with solid activity for DDR2 and DDR3 modules as well substantial demand for SDRAM chips. What legitimizes this rebound is the fact that demand is coming from all areas of the industry. Both PC builders and contract manufacturers have been active with RFQs and buys from the spot market.

While many anticipated that 2010 would start with the traditional lull after the holidays, this has not been the case. Converge believes many are being caught off guard by the surge of demand for memory so early in the month/year. Demand for SDRAM PC133 material is strong and supply is weak. Both 128MB and 256MB SDRAM have surged in price since the last week of December, with some configurations up as much as 50% in the spot market. Lead times from Samsung and Micron are getting longer, and we believe the shortages will continue for several months.

Several industry trade magazines are predicting strong spend from the corporate world for PCs in 2010. Microsoft® Windows® 7 seems to be a hit, and it's been years since many companies have upgraded. Converge anticipates DDR3 to remain in short supply throughout the first half of the year and possibly longer. We are already seeing the market in short supply for 2GB DDR3 in both desktops and notebooks. As 2010 continues and markets gain momentum, demand will only continue to grow.

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