Elpida predicts DRAM prices to drop by 20% in 1Q
While reporting its profit grew by 25% on year in the fourth quarter of 2006 due to strong DRAM pricing, Elpida Memory foresees intensifying price pressure in the first quarter 2007 and estimates that overall prices will drop by 20%, according to the company. Elpida reports record sales and profits in the fourth quarter of 2006, attributing the strong records to capacity expansion at its E300 fab and more procurement from foundry partners. Cost reductions also contributed to profitability and prices of DDR2 stayed stable in the fourth quarter, the company said.
Although projecting a 20% on quarter bit growth in the first quarter of 2007, Elpida said DRAM ASP is not going to reduce by less than 10%. This is contrary to expectations “on the street” for a 10% on quarter ASP drop. However, the Japanese chipmaker does note that price drop for PC OEMs will not be as much as 20% as demand for Windows Vista is strong and prices should sustain stability in this sense. Already negotiating prices with OEMs for February, Elpida did, however, see some customers request reductions up to 20%.
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