Pricing Watch: Commodities Up or Down?

Since one of the things I do on a daily basis is scan various sources of information for news, one of the things I can spot is a trend. It's not rocket science — if I see the word “price,” I automatically look for “up” or “down.”

Here's a compilation of the pricing trends I've spotted in the last week, and the sources of information. I've checked this information against what I am hearing and seeing from global broadline distributors, who are on the front line of pricing trends.

NAND: NAND flash contract prices have continued to decline in early November 2010, according to DigiTimes. Prices for 64GByte and 16GB MLC products dropped more than 7 percent, and 8GB MLC products fell 10 to 14 percent.

Reason: In Asia, the consumer market is approaching the slow part of the season and buying has leveled off. It is expected that the lower prices will help NAND makers gain more market share despite lower prices.

Solid capacitors: Prices are expected to decline, according to DigiTimes.

Reason: Solid capacitor orders for graphics cards have been shifted to Taiwan-based suppliers, which are offering prices 30 percent lower than their Japan-based competitors.

This is not consistent with the trends US-based distributors are reporting. For commercial capacitors overall, distributors are seeing ASPs increasing. Prices for ceramics are stable; high CV leadtimes are stretching out; and tantalum prices are increasing.

Solid State Drive (SSD): Prices decreasing by as much as 10 percent to 15 percent, according to DigiTimes.

Reason: Suppliers want to increase market penetration.

Hard drive makers on the other hand, have seen their prices increase.

No feedback from distributors.

DRAM: Contract prices are falling, according to DigiTimes. Contract prices for 1GB DRAM memory have plunged by over 7 percent.

Reason: The continued fall in DRAM prices reflects the fact that demand is too slow to keep up with chipmakers' output growth using advanced processes. The mainstream memory densities for PCs still remain 2GB, limiting overall DRAM consumption.

Feedback from distributors is average selling prices are stable for memory products overall. Lead times continue to increase. Supplies on most commodities are expected to remain tight.

Photovoltaic modules: Prices decreasing, according to IMS Research.

Reason: Pricing pressure for solar modules will result in a growing share of production taking place in Asia as suppliers seek to drive down PV module manufacturing costs. More than 70 percent of module production capacity will be located in Asia in the final quarter of 2010.

Booming demand throughout 2010 has resulted in high shipment growth and limited pricing pressure for the module industry. However, as the over-heating German market begins to show signs of cooling, PV suppliers across the entire supply chain are becoming increasingly focused on reducing their manufacturing costs.

No feedback from distributors.

A couple of things to consider here: In several cases the data is contradictory. It's important to note that for DRAM and NAND, contract prices are decreasing, while commercial prices — those offered through distribution — are stable or expected to increase. Obviously, there is still a lot of price disparity in the market that tools such as may help clarify. (See: Breaking It Down: How to End Component Pricing Secrecy.)

5 comments on “Pricing Watch: Commodities Up or Down?

  1. elctrnx_lyf
    November 18, 2010

    That is really a nice piece of composition just based on the data available through internet. Atleast as a whole the prices of all the components are going down. In general is it driven by reduced demand or due to increased supply? DRAM is definitely a special case since the IC industry is always moving toward the better process to produce very high speed devices which is not really required by majority of the elctronic devices excluding the telecom infrastructure equipment.

  2. AnalyzeThis
    November 18, 2010

    Thanks for this, Barbara! I'm very interested to see what the future holds in the photovoltaic space specifically. As you say, there's a lot of focus being put on reducing the manufacturing cost. Long-term, that will be crucial, because I feel that we're going to need to see just absolutely dramatic reductions in cost and improvements to the technology before that whole industry really matures and takes off.

    Obviously there will continue to be growth there, but it's the kind of thing that I don't see REALLY exploding for another decade or two.

  3. saranyatil
    November 19, 2010

    Thx for the infomation, definitely there is lot of new developements in technology every day hence most of the IC's get outdated and they dont suite the requirement hence there is lot variation in demand with respect to time. I agree there is going to be lot of new revolutions going to take place in the field of photovoltaic cells, as the world is moving towards live green and everyone feels their device can be powered with the resource which is abundantly available hence the prices of this will be high till they will reach a saturation point. next if we are looking into solid state drives they have been put into minimum use one may be because of the cost now since they want to plunge into the markets they might be looking into cost reduction.

  4. Mydesign
    November 19, 2010

          The universal pricing strategy is based on both demand and supply (demand vs supply). So this two factors, demand and supply are interrelated. But in this case am thinking in a different way. During November – December season, many of the European & western countries plans for reducing their production target, when compare with the rest of the year. Most of the employees are in holiday & celebration mood. So the companies reduce their purchasing target. Mean time due to the excess availability of the components in the market either distributors or component makers are forced to offer discounts to attain their year end selling targets.

  5. Barbara Jorgensen
    November 19, 2010

    Prices in PV may come down more quickly than anticipated–iSuppli just issued a report on China's investment and output goals over the next few years. Look for it under “Latest Research” –hope it helps!


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