06.08.2001
DRAM price runs out of steam after brief resurgence

• Following a three-day rally, the 128Mb SDRAM spot price declined 1% yesterday to close at NT$2.55 while 64Mb closed at NT$1.39, down 2.25%. This reflects massive over-capacity under continuing softening demand.

• In May, SDRAM prices declined 20% and DDR SDRAM 28% MoM. We believe DRAM makers' May revenues, to be announced next week, will show an average 10-35% MoM contraction. We estimate Winbond's (2344 'Hua Bang') May revenues at NT$2.0b, down 16% MoM, and the market expects Powerchip (5346 'Li Jing') to realize a MoM decline of 10% with NT$1.2b. Vanguard's (5347 'Shi Jie Xian Jing') results are set to fall 21% to come in at NT$811m. Meanwhile, Nan Ya Technology (2408 'Nan Ya Ke Ji') is predicted to post the sharpest monthly decline in revenues among DRAM makers with a 35% slide. This is due to its greater exposure to DDR.

• VB Primasia Investment Opinion: We remain conservative on DRAM in the short run, but reiterate a LONG-TERM BUY on Winbond and ACCUMULATE on Powerchip.

LindaLiu@Primasia.com +886-[0]2-2547-8867