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DRAMs, NAND flash prices continue to fall

Posted: 05 Sep 2008     Print Version  Bookmark and Share

Keywords:DRAM  NAND flash  contract prices 

According to market researcher Gartner Inc., DRAM and NAND flash contract prices continued to fall in August.

NAND flash prices across all densities fell because of weak demand, high inventory and oversupply.

Prices for mainstream multi-level cell (MLC) 8GB and 16GB parts declined 11 per cent and 23 per cent, respectively, while global DRAM contract pricing dropped after relatively high prices from April to June. Gartner says mainstream 1Gbit DDR2 prices dropped by 14.6 per cent to Rs.87.86 ($2.05), while pricing for 512Mbit parts was down 7 per cent. The older devices saw some further pricing declines as well.

Gartner reports that DRAM spot market pricing has been edging down for weeks while contract market pricing stayed relatively firm after experiencing price increases from April through June. However, with fear of undersupply in late Q3 08 and Q4 08, major PC OEMs are now burning off inventory that was accumulated during the second quarter of 2008, which has reduced demand and led to the price declines.

Module pricing fell to Rs.814.31 ($19) and Rs.1,628.62 ($38) for the 1GB and 2GB configurations, respectively, in late August, with the expectation that pricing in the first half of September will see further declines. Some market participants are talking about prices falling back during the next two months to the low point seen in April 2008, with the 1GB module reaching Rs.685.74 ($16) and the 2GB possibly going as low as Rs.1,371.47 ($32). Gartner expects any OEMs holding inventory will be quick to offload it with the expectation that pricing will decline further.

Spot pricing for DRAMs experienced its biggest weekly drop since the beginning of November 2007, according to Gartner. Average spot pricing across all densities and technologies was down 8.6 per cent compared with the previous week, standing at Rs.78.00 ($1.82) on a 1Gbit equivalent basis. Mainstream 1Gbit parts saw the strongest declines, with high-end pricing ranging down by 12 per cent. The 512Mbit part also saw strong declines.

Gartner continues to project a strong revenue rebound in 2009, up 25.1 per cent, but this is based on "mild" pricing declines in 2009 compared with the unsustainable pricing environment experienced in 2008. By 2011, the industry will likely enter a capacity-induced recession, according to Gartner's latest DRAM forecast.

Similarly, NAND flash contract pricing continues on its own downward spiral. This is during what is typically a seasonally strong time of the year, especially after three consecutive months of an oversupply situation, said Gartner. The problem is high inventories at vendors and customers because of stagnant end-consumer demand.

The 8Gbit and 16Gbit MLC NAND parts saw the biggest price declines. While 3bits-per-cell NAND flash did enter the market recently, it has had a negligible impact on pricing because the cost advantage is not strong enough when produced at 56nm, Gartner said.

NAND flash spot pricing also continued to slide. Lower prices were led by the commodity 8Gbit and particularly the 16Gbit MLC parts, whose low-end range of pricing fell to Rs.96.43 ($2.25). On a weighted 1GB average, spot prices sunk more than 4 per cent to stand at Rs.65.57 ($1.53).

In contrast, NOR flash memory pricing kept stable in August, after declining continuously for four months, with a range of 0.9 per cent to negative 3.4 per cent across all densities compared with July, reported Gartner. The main application for NOR flash is the cellular phone sector, which requires 128 Mb to 256 Mb densities; however, demand is decreasing with the use of NAND flash for data storage and code execution in the high-end handsets. Prices for 256Mbit NOR flash declined 0.03 per cent to Rs.170.58 ($3.98).

-Gina Roos

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