Knights of the DRAM table
Jun. 18, 1999 (Electronic Buyers News - CMP via COMTEX) -- Chip makers
are still on their quest for the Holy Grail of DRAM-namely, the
value-added memory that will release them from the bloodletting in
commodity devices. But this Grail may prove as elusive as the one in
Arthurian legend.
That's good news for OEM purchasers, who've reveled in cheap memory
for the past three years. As long as the world is swimming in commodity
memory, OEMs can count on continuing their current buying strategies.
Speaking to EBN in Korea, Yoon Woo Lee, president and chief executive
of Samsung's semiconductor business, reiterated his company's goal of
moving away from commodity DRAMs toward higher-margin memory products.
He told EBN that Samsung will hold 64-Mbit DRAM production at about the
current level of 15 million to 20 million per month, while moving
rapidly to more profitable 128-Mbit and Direct Rambus chips.
NEC, another DRAM power, is ramping up DRAM output, but focusing on
higher-priced 128-meg and embedded memory. And Toshiba, as a principal
supplier of the new DRAM chip for Sony's upcoming PlayStation 2 game
console, is casting its lot heavily with Direct Rambus.
Commodity DRAMs continue to be a chip-industry anathema. The pricing
freefall has resumed, after a brief leveling-off at the end of last
year, with the perennial culprit being a soaring chip oversupply.
Vendors have hoped that the DRAM market might eventually stabilize,
with a balance of supply and demand, but those hopes keep slipping. And
though the earlier consensus was that the light at the end of the DRAM
tunnel might come in this year's second half, the view is now shifting
to year's end or early 2000.
In the meantime, the pot of value-added DRAM gold at the end of the
rainbow continues to prove evanescent.
True, 128-Mbit DRAMs carry a price premium, but volumes are just now
starting to ramp up. Since 128-megs are made on the same lines as
64-Mbit devices, the major memory companies will simply shift the
production mix as demand for the new chips increases. With the Big Boys
in full sway in the die-shrink race and many upping capacity, there's
no reason to think that 128-megs won't be in ample, if not
overextended, supply when the market takes off.
As for Direct Rambus, its dice are 15% to 20% larger than SDRAM dice.
Since Direct RDRAM initially will divert production from existing SDRAM
lines, any big shift to Direct Rambus could gobble a lot of excess
silicon.
The biggest threat for OEMs is not the so-far futile attempts by DRAM
makers to shift out of commodity devices; rather, OEMs may feel the
impact if some suppliers finally get tired of the game and drop out of
the market altogether. On the other hand, if the big power players in
DRAMs continue their massive ramp-up of output, the dropouts might
never be missed.
Get ready to turn the page.
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