DRAM makers said to be coordinating production; Hynix managers said to oppose Micron link-up
By Mike Clendenin
EE Times
(01/30/02 11:28 a.m. EST)
TAIPEI, Taiwan. Major DRAM manufacturers are putting their heads together in an effort to coordinate production capacity just as talks between Micron Technology Inc. and Hynix Semiconductor Inc. have broken down over a disagreement on price.
The capacity talks are intermittent and unofficial, according to a memory chip executive in Taiwan, and do not touch upon the issue of pricing. Among the participants are Samsung Electronics, Micron and Infineon Technologies, but not Hynix, the executive said. "There are getting to be fewer and fewer suppliers so we have to work more closely," he said. "There is a lot of contact with these guys."
Suppliers are comparing notes about production quantities across different product lines, capacity plans and the expected supply of Intel's Pentium 4 chip in an effort to balance supply with demand. "We are not talking pricing because that is illegal, but we are talking about how to cooperate Å\ how to ensure that the supply side does not get crazy," he said.
A Samsung spokeswoman said the company "has never considered the coordination of production capacity" with other companies. Officials at Infineon and Micron were not available for comment.
After nearly a year of dismal memory chip pricing, DRAMs have shot up by more than 250 percent from their November low, bucking the traditional trend of a first-quarter dip. Opinions are divided over whether momentum will last. If confirmation of an increase in end-user demand doesn't materialize, especially for PCs, then prices are expected to drop once again.
Analysts have speculated that Intel's release of a double-data-rate chip set and its ramp of the Pentium 4 have sent memory prices artificially higher as OEMs and system integrators boosted orders to assure adequate supplies. The shortage is expected to be short-lived, according to market researcher International Data Corp. During this quarter, IDC expects supply to pull even with demand and then start to outpace demand for the rest of the year by about 4 to 6 percent.
There is also a lot of hope riding on Micron's planned acquisition of Hynix production lines, a move that would help keep capacity in check. "Nobody can afford the breakage of this deal," said Charles Kau, an executive vice president with Nanya Technology Corp., a major supplier of double-data-rate memory.
At Hynix there is opposition among high-ranking managers to any link-up with Micron, according to a source familiar with the company. These managers believe the company is capable of competing with Micron on technology. "The only problem is they don't have money and current control is held by the creditors, not by Hynix management. Yet internally they deny that this merger will happen," the source said.
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