Micron confirms DRAM
prices are still going up . . .
That little upturn in DRAM prices that began late last year isn't dieing out like some observers had expected. DRAM demand from PC makers is exceeding expectations in the first quarter, according to Micron Technology.
"Going into last December, our customers were setting us up to think about a 10% down first quarter compared to the fourth quarter," says VP Kipp Bedard. "They have [now] revised that to think more in the down 5% to flattish" range, he reports at Robertson Stephens' San Francisco technology conference.
Most of that new strength is coming from the consumer PC and the notebook computer segments, but "recently a couple of customers have mentioned a little bit of renewed corporate spending--a little bit of IT spending," Bedard says.
Another positive note is a surge in the amount of memory-per-system, according to Dave Parker, Micron's investor relations manager. The average amount of DRAM per box at the end of 2001 was 170 megabytes, he says. Now, "based on what our customers tell us, we're looking at a pretty clear path to 256 megabytes per box and possibly higher" by the end of this year. That's a 50% increase in DRAM per PC!
The introduction of Windows XP is the primary driver. "Most of our OEMs are telling us they're not really shipping any XP-configured boxes with anything less than 256 megabytes of memory," Parker says.
Despite rising DRAM prices, Parker expects them to continue to go up. "Elasticity is still in place," he believes, pointing out that for just $36, a PC owner can move from 128- to 256-megabyes of DRAM.
The OEM contract price for a 128 megabit, synchronous DRAM chip is now in the $4-to-4.50 range--or slightly ahead of the spot price, Parker says. That's three times the $1.30-to-1.40 price tag for the same chip in early December.
(See Feb. 26 story.)
. . . but adds not enough money is
being spent to maintain capacity
The massive drop in DRAM demand last year is resulting in the DRAM industry not spending enough to maintain global memory capacity this year, according to Micron Technology.
Dave Parker, Micron's investor relations manager, estimates that $13 billion in capital spending will be needed this year just to maintain existing capacity. But, he says, only about $6.5 billion is expected to be spent industry-wide this year.
Micron itself plans to spend $1 billion this year and is leading the charge to 0.13-micron process in the global DRAM business. Already, the Idaho DRAM vendor is building 10% of its wafers with the 0.13-micron process. Some 70% of all wafer starts are in 0.15-micron while the remaining 20% is in 0.18-micron. The company is now moving its overseas fabs to the 0.13-micron process.
The number of players in the global DRAM business continues to shrink. In 1996, there were about 28 DRAM suppliers, according to Parker, but that number had shrunk to only 14 by the end of last year.
Last year, the Micron executive says, the top five suppliers accounted for 80% of the DRAM market last year, and he predicts that "we could have three suppliers with 70-80% market share as we exit 2002." |
