DDR2 price drop has a dark side

TAIWAN'S TOP PRODUCER of DRAM, Nanya is a bit worried by the weakness of DDR2 contract prices, which could result in its profits suffering.

While everyone had predicted that the price of DDR2 would drop, they thought the loss of revenue would be made up by the shift to 50nm process technology and DDR3.

However Nanya told Digitimes that it can't see how the new process will offer any significant contribution to its profitability until the second quarter.

While Nanya swung to profits in the fourth quarter of 2009, it had been unprofitable for 10 quarters and is getting a bit short on cash.

Spot market price quotes for DDR2 chips have gone down by around 20 per cent, which is likely to drive down contract prices in February.

DRAMexchange data show that average prices for 1Gb DDR2 chips have fallen below $2.30, whereas chip prices in the 1Gb DDR3 segment averaged above $3.00.

Nanya said things will pick up a bit when its 2Gb DDR3 chips hit the shops. However it warned that its profits for the first quarter, if any, will not be that great.

Nanya expects to run its 12-inch fab flat out in March. µ