Memory Semis Update H1 Oct PC DRAM ASPs to fall 20%
* DRAM oversupply to continue to push down ASPs:
* We expect H1 Oct DRAM ASPs to fall roughly 20% to US$32/1GB module.
PC OEMs will likely take DRAM delivery in a 20%/80% split in H1 vs. H2
Oct leaving more downside for H2 Oct ASPs. MU indicated that MB/PC
growth has been slowing and that it intends to regain market share.
* Waiting for marginal DRAM players to push back capex:
* We expect ASPs to reach marginal player’s leading edge fab cash
cost in Q408 at around US$1.30/512Mb. DRAM makers are coming off 4
strong years of profit and may resist capex cuts at early stages of
cash cost resulting in more ASP downside. We believe Elpida and Hynix
planned reduced supply to the spot market alone may not have a
meaningful impact on ASP trend in Q4.
* H2 Sept NAND SLC/MLC ASPs fell 5/15% from H1 Sept:
* More successful ramp of 50nm and card maker reluctance to build
inventory has helped push NAND contract ASPs down. We continue to
expect seasonal demand slowdown towards the end of Q4 as Hynix and SEC
ramp new capacity and improve yields.
* Maintain caution on memory semiconductor sector:
* We rate more diversified NAND makers SEC and Hynix Neutral and more
pure DRAM makers Powerchip, ProMOS, NTC, and Inotera Sell. We believe
SEC and Hynix should benefit from relatively better NAND profitability
and lower cost structure from more successful sub 70nm DRAM migration.
