June 6, 2007 – Spot prices for DRAM memory have risen for a second straight week according to data from DRAMeXchange and Gartner, suggesting that prices may have finally fallen below costs and could be poised for a rebound.

Spot prices for 512Mbit 64Mx8 DDR2 memory rose 13.7% for the 7-day period ended June 4 to $1.74, nearly a 14% increase, following a 12.5% increase in the previous week, according to DRAMeXchange. The individual 512Mbit chips rose roughly 7%, better than the ~2% increase in the prior week. The group attributed the bounce to low inventories, as chipmakers control supplies to help solidify ASPs.

Gartner’s latest data (7-day period ending June 1) also showed a rise in 512Mbit 64Mx8 DDR2 memory, with a 4.3% increase in overall spot pricing across all densities and technologies. The firm noted that “most DRAM vendors seem to be trying to hold back supply not only to the spot market but also to the OEMs.”

DRAMeXchange noted that contract prices slipped about 5% in the past week and are now roughly $15-$17. DRAM makers hope to establish a floor of $16 contract prices in May, though they have negotiated some “special deals” at $15 to help get rid of excess inventory, the group noted. Meanwhile, Gartner related a rumor that an OEM phoned a DRAM vendor last week looking for “end-of-month” deals but found none were available.

Despite an expected increase in DRAM output from Korean chipmakers, their commodity DDR2 chips declined roughly 15%-20% in early June, noted DRAMeXchange. Contract prices in July “stand a chance of rising slightly,” since memory prices are already below cost for DRAM makers.

DRAMeXchange cited a recent interview with a top Elpida exec saying the company has a “bullish view” for 2H07, believing that contract prices are now hitting bottom, PC OEMs’ inventory is already low, and inventories should start to become tighter. The group noted that Elpida’s DRAM fab in Hiroshima is currently at 80,000 wafer starts/month, and could expand to 100,000-120,000 wafer starts/month next year, with increased output for non-PC memory, and that the company should see costs go down as it migrates to 70nm process technologies and 1Gbit DDR2 production.

DRAM spot prices bouncing back
(Prices in US $)

Memory type………….June 4………….vs. May 28 (% change)………….vs. May 21 (% change)