Higher DRAM Prices Coming (MU, INTC, ISSI, SNDK, CODE)

DRAMeXchange has released a report calling for DRAM prices reaching a bottom.  More importantly, the report is saying that 20% to 25% rebound in DRAM prices is foreseeable by the second quarter of this year.  While this is music to the ears of Micron Technology Inc. (NASDAQ: MU), there are many more winners here other than just the obvious.

DDR3 2GB average contract price is $17, while $16 was the low contract price, and the decline is narrowed to 5% to 6% from 10% in the prior term.   The second half January contract price is still under negotiation.  DRAMexchange expects that the price will remain stable and mildly decline.

With the launch of Sandy Bridge in early January, better acceptance of 64bit operation system and low memory prices, new model content will be up to 4GB or above.  The belief is that OEMs and PC-makers will start stocking inventory levels in the first quarter and in early second quarter (both 2011), and that this the thesis for a 20% to 25% rebound in DRAM prices.  Sandy Bridge is the processor microarchitecture developed by Intel Corporation (NASDAQ: INTC).  Let’s not forget the smaller and independent DRAM and SRAM maker Integrated Silicon Solution, Inc. (NASDAQ: ISSI).

SanDisk Corp. (NASDAQ: SNDK) has some good sector news as well for flash memory.  There is also Spansion Inc. (NASDAQ: CODE) in NOR Flash.  Earlier this week, DRAMexchange said that the first half January mainstream NAND Flash market contract price was up 2% to 5% as inventory replenishment has warmed up from mid-December. The expectation had been for a decline in price but a Toshiba power outage accident made memory card customers initiate inventory replenishment ahead of the Chinese New Year.

JON C. OGG