DRAMeXchange analysts expect DRAM production will fall by more than 10 percent because of the continued fall in DRAM prices. the DRAM industry is now experiencing more losses for every chip sold, and will need to resort to more production cuts.
Nanya and Inotera have also announced production cuts in addition to previous announcements from PSC, Elpida, Hynix, and ProMOS. For Nanya, in addition to delaying expansion plans for both Mei-ya– a joint venture with Micron– and Fab3 Phase 2, its Fab3 Phase1 will also cut production from 30K to 15K from now to Q1 next year as Fab3 Phase1 needs to transition to Micron’s stacked process. Inotera has cut production by 20% from 130K to 104K. Combined with announcement from other DRAM makers previously, DRAMeXchange estimates total worldwide production cut of 12-13%.
Despite the production cuts, spot price for DDR2 1Gb eTT last week declined another 3.8% last week (10/21-10/27) from US$1.05 to US$1.01 as market pessimism took over when Samsung announced its revenue for memory has slipped. DDR2 667 1Gb also fell around 6.6%, making both the DDR2 667 1Gb eTT and original brand maker die price falling closer to history lows of US$1.0 and far below cash cost of US$1.3-1.5 estimated by DRAMeXchange.
Contract price continued its falling trend late in October with ASP for DDR2 667 1GB and 2GB modules falling to US$12 and US$24 respectively for a decline of more than 10% MoM and a decline of more than 45% compared with the July price of US$22 and US$44. Given PC market will begin to move into slow season in November and the drastic fall in global demand, Contract price may fall further, but decline should be limited, as US$10 /1GB is already at the cash cost level.