Prices of the mainstream DRAM chips posted a sharper sequential drop in the contract market in the first half of October, implying a fundamental slow demand among all major OEMs. A heavy downside price pressure will continue throughout the entire fourth quarter, meaning a true price bottom is yet to come.
Contract price for the mainstream 2GB DDR3 modules averaged at US$30.70 in the first half of October, representing a 10% sequential drop. The same-density DDR2 modules averaged at US$32, representing a 5% drop in the same period.
Similar as September, most OEMs do not have a strong incentive to build more inventory. As inventory pre-stock procurement for the upcoming Thanksgiving and year-end holidays has already completed, most only buy for inventory replenishment, rather than any strategic inventory buildup.
For the supply side, all vendors continue growing output amid process migration to 40nm- and 50nm-class process. Most continue offering competitive pricing with some from Taiwan even cutting quotes sharply. Such an aggressive pricing strategy has also spread to the high-density memory segment, as evident in the sharp price cut of 4GB DDR3 modules.
Most OEMs will have their memory content per box maintain flat (below 3GB) in the fourth quarter. While supply continues growing and demand can hardly keep pace with supply, a heavy price downside pressure is expected to persist throughout the entire fourth quarter. Contract price for per Gb DDR3 is expected to fall around 35% on quarter to US$1.55, the firm estimated.