TAIPEI, TAIWAN: DRAMeXchange records that prices of 512Mb and 1Gb have dropped by 6.2 percent and 5.6 percent, respectively, during July 1-14. In the branded segment, prices of 512Mb 667MHz and 1Gb have been also dropped by 2.9 percent and 5.9 percent, respectively, in the same period.

DRAM price and transactions were weak due to gloomy economy, stricter probe actions over DRAM smuggling in China prior to the Beijing Olympics and consistent expansion at Rexchip. However, note that prices of 512Mb and 1Gb DDR2 eTT secured at US$0.90 and US$1.80 mark despite price of these chips once dropped to US$0.83 and US$1.78 last week. The immediate transaction once prices touched these levels has justified our statement.

Contract prices of 1GB and 2GB DDR2 667 maintain flat at US$22 and US$44, respectively, in 1HJuly, marking a rest to the consistent upward price trend since April. Yet, there still exist a price premium as high as 19 percent (contract price of 1Gb DDR2 667 at US$2.38/die vs spot price of US$2), a divergent price trend is still remained between the two market places.

According to DRAMeXchange's analysts, price negotiation between DRAM suppliers and PC OEMs has taken one more week as both sides did not reach a consensus over pricing because:

1) A Korean vendor has settled a month-long pricing in late May, with the settled prices 10 percent cheaper than average;
2) PC OEMs have started building up inventory from 2Q with some even having their inventory turnover staying at six-eight weeks level.

Despite prices of most settled deals maintain flat, the Korean vendor that has settled a month-long contract before, still unable to raise its quotes. Therefore, DRAMeXchange think price of cheaper parts likely to see a 5 percent increase in 2HJuly, with overall pricing to maintain flat.