DRAM contract prices set to continue rising

With some DRAM vendors reportedly quoting their 4GB DDR3 modules at more than US$20, higher than the current contract price level, contract prices for commodity memory are set to rise through February, according to industry sources.

Contract quotes for 4GB DDR3 modules came at between US$17 and US$17.50 in the first half of January, DRAMeXchange data shows. A combination of supply-side factors, such as a cutback in production of PC DRAM and more capacity allocated for mobile DRAM and server-use memory, lifted the early January quotes by almost 10%.

DRAM contract prices will continue their upward trend in February, driven mainly by the supply side, the sources indicated. Thanks to the price rally, suppliers that remain in the red will have a good chance of returning to profitability in 2013, the sources believe.

Inotera Memories, for instance, is expected to swing to profits in the second quarter of 2013, the sources said. Inotera reported net losses of NT$3.72 billion (US$128 million) for fourth-quarter 2012, which marked the 12th straight quarterly loss for the company.

Inotera has revealed plans to shift a majority of its total wafer starts to 30nm process technology by April, and the ramp-up will help improve company cost structure.

Fellow DRAM firm Nanya Technology recently remarked that the company's revised partnership with Micron Technology will help significantly reduce its R&D expenses. The firm is also looking to complete its technology transition to a 30nm process by the end of the third quarter to further lower its manufacturing cost.

Nanya is set to gradually be phased out from the commodity DRAM chip market with plans to discontinue supplying commodity chips to clients by mid-2013., the firm disclosed.

Nanya generated net losses of NT$8.88 billion in the fourth quarter of 2012 - also the 12th straight quarterly loss for the company.