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DDR prices dropped rapidly
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Monday, February 10, 2003
Pricing for 256-Mbit Double Data Rate (DDR) SDRAM is dropping rapidly, and could fall below the levels of equivalent-density SDRAM in the near future, iSuppli Corp. predicts.
DDR spot market average selling prices (ASPs) have been on a nearly continuous slide since November 2002. Meanwhile, pricing for the older, commodity SDRAM largely has stayed put.
In the U.S. spot market, the 256-Mbit DDR ASP this week declined by 1% to $4.25. Meanwhile, the ASP for 256-Mbit SDRAM held steady at $3.55.
The spot market price premium for 256-Mbit DDR compared to SDRAM was nearly 200% as recently as the middle of December. Price crossover already occurred in late January between 128-Mbit DDR and the equivalent-density SDRAM.
DDR's price slide is not a big surprise, given that it rapidly is becoming the mainstream commodity memory for PCs. SDRAM's price stasis also is unsurprising, because its usage is being phased out by the major U.S. PC OEMs while suppliers are curtailing its production.
SDRAM's future prospects lie in the Chinese and Indian markets, which offer the most growth potential of any of the world's regions. Demand from these countries PC-makers, which still use SDRAM for low-end systems, could cause SDRAM prices to rise in the future.
In parallel with the spot-market pricing slide, DDR contract prices in the first half of February declined yet again, falling by 10 to 15%.
The near-term DRAM pricing situation continues to look grim for suppliers. There appear to be no factors in the market that could spur a price increase this month.
Spot traders are expected to delay any purchases or inventory-building efforts until they have determined with certainty that the bottom price point has been reached. Unfortunately, iSuppli believes that DDR prices haven't reached that point yet.
However, when DDR prices do bottom out, a factor may come into play that could send prices up again: Major module manufacturers typically purchase large volumes of DRAMs at or near the bottom of the price curve. This phenomenon usually causes spot prices to rise.
If and when this occurs, spot traders will join in the price hikes and begin to buy and hold DDR, iSuppli predicts.
To break the DRAM market out of its price-erosion spiral, the industry needs new technology and new products that can boost the overall ASP, iSuppli believes. Two new products that potentially could do this are DDR PC-333 and DDR PC-400 SDRAM.
Manufacturers' shifts to DDR PC-333 and DDR PC-400 could generate supply problems and send prices rising, much as the rocky ramp up of DDR PC-266 did in 2002. However, iSuppli does not expect the same degree of DDR supply tightness seen last year because many manufacturers now are making progress in increasing production of DDR PC-333 by using advanced processes.
Samsung Electronics and Infineon Technologies AG already have ramped up DDR PC-333 yields by using their 0.13- and 0.14-micron processes. Hynix Semiconductor Inc. is converting its process geometry to 0.13 micron for DDR PC-333 production. Micron Technology Inc. is aggressively migrating to the 0.11-micron geometry to maximize its yields for DDR PC-333.
Although DRAM suppliers have increased DDR PC-333 yields surprisingly quickly, DDR PC-400 yields now are less than 30%. DRAM makers will need to make substantially more effort to achieve satisfactory yields for DDR PC-400.
By: DocMemory
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