DRAM Correction Playing Out Pretty Much As Expected

According to the latest weekly report from DRAMeXchange:

The month-end inventory pressures have caused the spot price to slip further. Amid an anticipated DRAM price rebound, various retailers and module houses have aggressively stocked up on DRAM chips. Unfortunately, the current May-June market demand does not appear to be in line with their expectations. The overly high inventory levels are thus creating a negative impact on the spot price. In addition, despite the huge DRAM price corrections that began to take place this year, chip manufacturers are still pressing ahead with their capacity expansions. Therefore, whether or not the demand can keep pace with the increasing supply will be a primary issue to monitor in 2H07.

With memory prices falling by as much as 10% per week, it is hard to see demand for more equipment staying as firm as some people expect. However, it is pretty much in line with what we have been noting.

For example, “various retailers and module houses have aggressively stocked up on DRAM chips” looks similar to Hewlett Packard (HPQ) saying they will “appropriately make inventory trade-offs, including some strategic buys to take advantage of deals” while “The overly high inventory levels are thus creating a negative impact on the spot price” sounds suspiciously like the rest of HPQ’s comment: “we need to do a better job in inventory management, and you should expect us to work on reducing inventory levels going forward.”

And don’t even get us started on “whether or not the demand can keep pace with the increasing supply will be a primary issue to monitor in 2H07.”

Comments

[SgtSally]

"The month-end inventory pressures have caused the spot price to slip further."
With most machines now Vista configured machines needing 2 gig (most usually 2x1 gig) it would have been interesting to see the price movement in that category. 256 and 512's are now functionally obsolete - one would expect to see prices fall.

[William Trent]

All the inventory for Vista was built up in the fourth quarter. Now they are waiting for Vista to clear it out.