DRAM module makers start dumping inventory

With DRAM contract prices bidding farewell to a upward pricing trend that had been maintained since April, DRAM module makers have started dumping their inventory, which they have been building from the second quarter, according to industry sources.

According to InSpectrum, DRAM contract prices enjoyed a steady rise from April to the second half of May. Prices later remained flat through July. But in the first half of August, price of the benchmark 1Gb DDR2-800 posted a drop for the first time since the second half of March at a decline of 0.9%.

The research firm projected that DRAM contract prices should weaken in the first half of August because PC OEMs still house relatively high inventory levels and weak demand has discouraged their re-stocking incentive. The industry sources remarked that the inventory issue is spreading to DRAM module houses as well.

Some DRAM module houses started piling up their inventory late in the second quarter under an anticipation that an upward-trend in contract prices would help spur spot prices to trend upward later. Yet, given that the upward DRAM contract price has started weakening, worries of an aggravated price trend has thus surfaced and stimulated the inventory dump, the sources explained.