Quake only exacerbated DRAM squeeze
By Robert Ristelhueber
EE Times
(10/01/99, 2:57 p.m. EDT)
SAN MATEO, Calif. ? The earthquake in Taiwan was just the latest in a string of factors that caused the current shortage and price spike in DRAMs, which leads many to expect a long-lasting memory squeeze for OEMs.
One problem was the difficult transition many DRAM makers experienced in moving to linewidths below 0.25-micron this year, said Jamie Stitt, DRAM business development manager at Toshiba America Electronic Components (Irvine, Calif.). "There were major challenges in going to 0.22 and 0.18," leading to poor yields at many vendors. "Some DRAM manufacturers were possibly making fewer parts in the third quarter than at the beginning of the second quarter." He expects similar snags when the shift to 0.15 micron begins to takes place next year.
There were other contributing factors to the DRAM shortfall, according to Kipp Bedard, vice president at Micron Technology Inc. (Boise, Idaho). "As of last spring, Taiwanese incremental wafer capacity was moving back to other products that gave them substantially better gross margins," he said. Low-end PCs in July began offering 64 Mbytes of DRAM, up from 32 Mbytes, and PC companies began introducing new models for the back-to-school season a month earlier than usual. The power outage that affected Taiwan this past summer also had an impact, Bedard said.
Contract prices for October are now above $10 for 64-Mbit DRAM and double that for 128-Mbit parts, said Toshiba's Stitt. Spot prices for 64-Mbit parts shot up to the $20 range early this week before easing to $17-$18. "What we had was a panic factor for a few days [after the Sept. 21 quake] followed by a few days in which a little more sense prevailed," said Keith Horn, director of memory marketing for Fujitsu Microelectronics Inc. "But there's still a lot of uncertainty. We have relationships with foundry partners in Taiwan, and we're sweating to get high-quality information from those sources. It will take a week or more to assess the October-December quarter."
The wide discrepancy between spot and contract pricing places DRAM makers in a bind, said Ron Bechtold, vice president at the DRAM division of Hitachi Semiconductor (America). "A manufacturer is put into a very uncomfortable position if his competition is getting 2X the revenue selling into the aftermarket and he's holding the bag selling to the OEM." Yet DRAM makers must be cautious not to antagonize OEMs who represent the bulk of orders.
Because of OEM demand, Micron was able to put just 13 percent of its DRAM supply into the spot market in the fiscal quarter that recently ended, compared to a historic range of 20 to 30 percent. The company was hoping to bring that figure up to 15 to 20 percent in the current quarter, but "I don't think we're going to get that high based on the demand we're seeing from the OEMs," Bedard said.
Micron's top OEMs were recently asking for 4.5 million to 5 million units per week to meet the Christmas season demand, but the company told them it could only supply about 2 million units per week, Bedard said. Demand has been shifting from white box makers to name brand suppliers, he added.
Micron expects that all of its Boise capacity will be shifted to 0.18-micron in about four months, and a small part of the Boise fabs are already being moved to 0.15-micron. Its overseas fabs are about a month away from being completely converted to 0.21-micron, with around 15 percent percent of those lines already at 0.18 micron.
Between the new wafer starts and the die shrinks, Bedard calculated that industry bit growth will be around 70 percent over the next 12 months, while demand will be up 75 to 80 percent. Demand could grow even faster, depending on when Windows 2000 is introduced, which could drive DRAM demand to 128Mbytes per box, he said. |
