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Contract prices for 2 GB and 4 GB DRAM modules fell sharply in the first half of August, reflecting weaker demand from PC OEMs, according to researcher DRAMeXchange of Taiwan.
The average contract price for a 2 GB DDR module in the first half of August fell 15.5 percent to $12.25, while a 4 GB DRAM dropped 16 percent $23.50, reported DRAMeXchange.
PC OEMs are uncertain about shipments in the second half, and DRAM purchasing has declined. To compete in the marketplace, DRAM manufacturers are lowering prices hoping to increase shipments and hold onto market share. As a result, memory IC buyers can expect contract prices to continue to fall, according to DRAMeXchange.
Since PC DRAM content per box has not increased significantly, and economies worldwide are not improving, there is severe supply and demand imbalance. The DRAM industry is back to the state it was in during the 2009 financial crisis, DRAMeXchange reported.
Some Taiwanese DRAM manufacturers are cutting production or storing raw wafers in a wafer bank to try to survive the weak market by decreasing cash outflow. For instance, DRAM maker ProMOS has reduced its wafer start volume from 50,000 to 25,000 starts per month. The manufacturer was also the first to cease production of DDR3 wafer starts. Currently, only DDR and DDR2 products are being manufactured, but production of those parts may be reduced, noted DRAMeXchange.
Powerchip and Rexchip are considering depositing raw wafers in wafer banks. Powerchip has made production cuts and has begun to decrease commodity DRAM wafer starts. If prices continue to fall, buyers can expect some DRAM makers to further production cuts.
However, Samsung is not reducing production. In fact, Samsung expects to begin mass production on 28 nm processes in the second half and plans to increase market share. Hynix has decreased commodity DRAM revenue to about 30 percent in favor of more profitable products such as server DRAM, mobile DRAM, and other specialty products.
DRAMeXchange expects that the oversupply state of commodity DRAM bit output will reach 20 percent because of weak PC demand and little increase in DRAM content per box. If Samsung or other Korean DRAM manufacturers do not make capacity cuts, the market will not return to a state of balanced supply and demand, and DRAM price will continue to fall.