Contract prices for second half May: DRAM prices remain flat, NAND prices increase
In the second half of May, the contract price for 4GB DRAM modules remained flat m-m at US$30.5. With PC demand increasing rapidly, we expect DRAM prices to rise slightly in 3Q14. Meanwhile, we believe that NAND prices will recover after 3Q14. We remain Positive towards the semiconductor industry, believing that the above-stated points will positively impact SK Hynix and SEC.
PC DRAM contract prices stay flat in second half of May; DRAM prices to remain stable
- In the second half of May, the contract price for 4GB DRAM modules stood at US$30.5 (vs US$30.5 in the second half of April (of note, no data was released for the first half of May)). Meanwhile, the contract prices for DDR3 2Gb and 4Gb chips stood at US$1.75 (flat m-m) and US$3.50 (flat m-m), respectively.
- We attribute the recent stabilization of PC DRAM contract prices to improved demand and waning supply. In detail, demand has been increasing thanks to rising notebook shipments at ODMs (including Quanta, Compal, and Inventec). Meanwhile, we expect DRAM supply to remain tight as: 1) manufacturers continue to switch PC DRAM production for mobile DRAM production; and 2) output is decreasing due to tech migration.
NAND contract prices rise slightly h-h in second half of May; NAND prices bottoming out
- In the second half of May, the contract price for 64Gb MLC NAND climbed 2.14% h-h (half month to half month) to US$2.87/unit, while the contract price for 32Gb MLC NAND grew 2.80% h-h to US$2.20/unit.
- We believe that NAND demand has remained weak in 2Q14 due to slowing growth in the smartphone market (despite ‘Galaxy S5’ effects). However, with additional smartphone companies (such as Apple) expected to release new models in 3Q14, NAND demand should rebound in the near term.
- In terms of NAND supply, Micron is in the process of switching production (from DRAM to NAND) at its fab in Singapore; however, we note that the firm is controlling the pace of transition in order to support NAND prices.
DRAM prices to increase slightly and NAND prices to recover in 3Q14
- Led by seasonal effects, we expect the contract price for 4GB DRAM modules to climb to US$31 in 3Q14, a factor which should serve to benefit both SK Hynix and Samsung Electronics (SEC).
- Meanwhile, NAND prices should grow in 3Q14. That being said, with the advances being made in NAND technology (ie, the introduction of 3D NAND and triple level cell (TLC)) set to slash costs, we believe that NAND prices will fall over in the mid- to long term.
*Source:Woori Investment & Securities Co.