DRAM makers play the slots
September 22, 1997, Issue: 1076
Section: News
By Jack Robertson
Micron Technology Inc. and its Japanese and South Korean rivals are in a high-stakes game of 64-Mbit-DRAM chicken. The winner will be determined by how much density PC makers put in their boxes starting next year.
Asian companies are ramping up 64-Mbit output mightily - despite a much slower sales increase in the high-end workstation and server niche markets. Samsung Electronics Co. Ltd. is boosting 64-Mbit output to 5 million units per month. Hitachi Ltd., Hyundai Electronics Industries Co. Ltd., LG Semicon Co. Ltd., NEC Corp., and Toshiba Corp. are increasing output to 2 million to 3 million units per month. The 64-Mbit market is becoming glutted even before it gets off the ground.
Jonathan Joseph, a financial analyst at Montgomery Securities, San Francisco, has said that the Far East players stand to lose money until the 64-Mbit market reaches respectable mass volume. The longer that takes and the more that 64-Mbit-DRAM prices tumble, the greater the squeeze on the companies that are banking on the new chip.
Micron, in contrast, has remained committed to the high-volume 16-Mbit market, eschewing the next-generation memory chip until the U.S. company can produce it at a bit cost the same as or lower than that of the current devices. But if demand for 64-Mbit DRAM bursts open before Micron is fully positioned, the U.S. memory maker could rapidly lose the big unit lead it has built up in the current global DRAM market.
At this point, it's an open question how the market for 64-Mbit DRAM will go. As long as PCs stick with 32 Mbytes of main memory, 16-Mbit chips in a memory card in a single PC slot - with an obligatory spare slot set aside for expansion - will suffice, said Donald Baldwin, Micron's vice president of sales.
But if OEMs jump to 64 Mbytes of main memory in a single slot, then a lot of 64-Mbit-DRAM chips will be needed.
OEMs themselves probably don't know how the memory race will evolve. With PC models changing every three months, almost anything can happen.
Even the currently growing 64-Mbit oversupply might quickly evaporate if the PC makers' 64-Mbyte memory push advances too quickly. But that will probably be only a momentary glitch until device makers pour on production, accelerate shrinks, and add capacity.
At that point, it will be DRAM deja vu all over again.
Copyright (c) 1997 CMP Media Inc. |
