Slight relief for Asia DRAM chip market

The dynamic random access memory (DRAM) chip sector in Asia is set for a modest cyclical pickup in the coming months, following a bleak second quarter which saw spot prices plummeting to new lows, according to a Dow Jones report.

SINGAPORE--The dynamic random access memory (DRAM) chip sector in Asia is set for a modest cyclical pickup in the coming months, following a bleak second quarter which saw spot prices plummeting to new lows, according to a Dow Jones report.

Demand for PCs--and DRAM--traditionally slackens in the second quarter but picks up in the summer, driven by back-to-school sales.

Dow Jones quoted industry experts as saying that PC demand is expected to rise gradually in August. That would pull DRAM spot prices up to around US$3 by the end of October, predicted Alfred Ying, head of Taiwan research at BNP Paribas Peregrine Securities.

The report also quoted Taipei-based Merrill Lynch analyst Tony Tseng as saying that motherboard shipments could pick up sometime in July.

Taiwan memory product makers generally agreed with these projections, but many believed such demand would not be felt in the DRAM market for awhile, and may not be enough to rejuvenate the chip sector.

The spot price of a 128-megabit DRAM chip has dropped to US$1.70, while 64Mb chips are US$0.83 apiece.

One factor weighing down prices--apart from weak PC demand--is a glut of unmarked, or untested, chips in the spot market. Quoting industry sources, Dow Jones said the practice of selling off untested chips is widespread and is being carried out by hard-pressed chipmakers trying to cut their losses and reduce inventory levels. Chipmakers can trim US$0.20-US$0.50 off their costs by choosing not to test their chips.

Meanwhile, major players Hynix Semiconductor Inc and Micron Technology Inc have continued with their aggressive chip pricing. Hynix's 128Mb chips are trading around US$1.70-US$1.75, while Micron chips are US$1.80-US$1.85 apiece. Their move is forcing other players to keep prices low, Dow Jones reported DRAM brokers as saying.

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