Spot price for mainstream DRAM chips in the spot market posted a notable drop in the week November 1-5, as traders/brokers were shocked by a sharp price fall at the contract market, according to inSpectrum.
As of the noon session of November 5, spot price for 1Gb DDR3 plunged 8% to US$1.57 and the same-density DDR2 was down 2% to US$1.65.
The 6% sequential price drop for the mainstream 2GB DDR3 rang alarms among industry players in the spot market, stimulating them to further dump inventory amid a bearish outlook. Although Elpida Memory has announced production cuts, the news is not going to bring any positive catalyst as most will interpret the news as a reliable signal for a bearish market going forward, said inSpectrum.
Demand is still very slow at channels. Under such a pessimistic sentiment, traders/brokers were very sensitive to news. Therefore, inSpectrum believes similar inventory clearance will be seen in the near term, especially during the end of months end and quarters end.
Some traders/brokers have shifted attention to DDR2, the legacy item, in attempts to compensate their losses from the DDR3 segment. Some speculative trading was seen, followed with a mild price rebound. But the rebound proved to be short lived, inSpectrum observed.
Given that Elpida has started cutting production at its own fabs and at its foundry partners, inSpectrum expects an influx of 65nm-made chips to be dumped to the spot market throughout the fourth quarter, was foretells shaper price pressure ahead in the spot market. The firm expects spot prices of 1Gb DDR3 chips to drop by at least another 30% on quarter in the fourth quarter, averaging US$1.60 or even lower.