Bit-price parity looms for 16-, 64-Mb DRAMs
techweb.com
By David Lammers
Tokyo - The bit-price crossover between 16- and 64-Mbit DRAMs came into focus last week, as the achievement of parity on Japan's spot market for extended-data-out parts prompted analysts to predict that full-blown bit-price crossover is only a few months away.
That was hardly cause for celebration in the DRAM market, which has been so plagued by overcapacity that some producers have scaled down their capital-investment plans in a bid to regain profitability. The investment pullback, if it becomes widespread, could buoy DRAM prices-and perhaps set off another round of DRAM shortages for computer makers-two or three years down the road.
NEC Corp. Semiconductor Division chief Hajime Sasaki sees the DRAM price decline as part of a larger picture, in which the low-cost PC is driving down price points for a range of components. "The $2,000 desktop and $4,000 notebook have become the $1,000 desktop and $2,000 notebook. That is one reason LCD prices also are under such strong pressure," Sasaki said. "The [DRAM] overcapacity is there, but there is price pressure across the board."
At the same time, the competitive field has grown more crowded. "Ten years ago, we didn't have so many companies in each market," said Sasaki, who predicted that synchronous-DRAM bit-price crossover will occur in next year's second half.
Some observers are more conservative in their price predictions. Bob Brown , president of Toshiba America's Electronic Components Division (Irvine, Calif.), said he thinks "the crossover is being pushed out" by what he called a "humongous increase" in DRAM supply and inventory. Brown likened the present situation to 1985's massive inventory liquidation and subsequent price erosion of 64-kbit DRAMs.
Cost containment
Beyond near-term inventory adjustments, DRAM makers are looking to rein in future manufacturing expansions.
Electronics analyst Peter Wolff at Baring ING Securities Japan said South Korea's three largest semiconductor companies have decided to slash investments over the next year. Samsung is getting first silicon from its Austin, Texas, fab now and will cut capital investments in 1998 as will LG Semicon and Hyundai Electronics.
"The only exception in Korea is the Dongbu Group, which is building an 8-inch wafer plant to supply OEM DRAMs to IBM [starting] late next year or early in 1999," said Wolff.
Akira Minamikawa, senior semiconductor analyst at IDC Japan, said an investment cutback is long overdue. Many companies have recently spent 30 percent of revenues on new capacity, up from the historical norm of 17 percent to 20 percent, he said. At the same time, new players are taking the field.
Toyota Motor Corp., for example, will enter the DRAM business in a joint venture with Hitachi Ltd. Toyota will build a DRAM fab at a yet-to-be-determined site in Japan for 64-Mbit and 256-Mbit DRAM production, starting in 1999, using licensed Hitachi technology.
Overall, however, investments are being moderated from "unsustainable" rates, Baring's Wolff said. "Semiconductor makers in Japan and Korea are going to cut capital spending plans. Samsung and Hyundai managements clearly are looking at cutting unsustainably high levels of spending in the coming year.
"Samsung's inability to raise
[a hoped-for] $300 million earlier this week in a global bond offering [it raised $130 million] underscores the need to rethink its priorities."
In Taiwan, foundries such as Taiwan Semiconductor Manufacturing Corp. (TSMC) and United Microelectronics Corp. (UMC) are expanding, but TI-Acer recently announced it would postpone its second fab.
On the Japanese spot market last week, standard 16-Mbit (4-Mbit x 4) EDO DRAMs sold for about 460 to 470 yen ($3.60 to $3.67), and the corresponding 8-Mbit x 8 EDO DRAMs sold for almost four times that much.
Contract prices for volume shipments of 66-MHz synchronous DRAMs are another story. Minamikawa said IDC believes SDRAMs will take three or four more months to reach bit-price crossover, in the first quarter.
SDRAMs continue to command a significant premium over EDO parts, he said. A 3-V-operation 66-MHz SDRAM, in contract volumes, costs $5 to $6; the corresponding 64-Mbit density sells for about $30 on an OEM, or volume-contract, basis.
But "by the first quarter, many leading 64-Mbit-DRAM makers will be quoting aggressive prices for 66-MHz SDRAMs-in the $23 to $25 range-to gain market share," Minamikawa predicted.
Faster SDRAMs
Not all DRAM makers have ramped 64-Mbit production. Micron Technologies (Boise, Idaho), which makes 28 million 16-Mbit DRAMs per month, plans to start 64-Mbit production next March, and Texas Instruments Inc. (Dallas) manufactures only about half a million 64-Mbit parts each month. Toshiba plans to boost its monthly 64-Mbit production from 1.2 million now to 2 million by year's end, a spokesman said.
Japan's DRAM industry is trying to keep ahead of its rivals by shifting to faster SDRAMs. Kenji Tokuyama, an NEC general manager, said the company has fully depreciated fabs in Japan that can be upgraded for 100-MHz SDRAM production. NEC's new 0.25-micron fab in Scotland will require higher depreciation rates, he noted. A 128-Mbit SDRAM will go into volume production toward the end of 1998.
NEC's Virtual Channel Memory design (see Nov. 17, page 6) will see silicon next April, with sampling of a 64-Mbit design that will go into volume production in August, Tokuyama said.
Those 100-MHz parts will be needed for desktops based on Intel's 440BX chip set. But a 0.28- or 0.25-micron process is needed to make 100-MHz SDRAMs, and current yields are low.
Though Japan's leading DRAM makers are shifting to SDRAMs as fast as the market allows, profits are unlikely to rebound soon. The $1,000 PC, which typically ships with only 16 Mbytes, is one reason. Another is Japan's desktop market, dead in the water despite good notebook sales in Tokyo.
Japanese companies are taking a two-pronged approach, keeping about half of their DRAM production-mainly for the higher-performance parts-in Japan while licensing technology to partners in Taiwan, Singapore and elsewhere. Examples include PowerChip Corp., which is a Mitsubishi Electric joint venture with the Umax group; Fujitsu's relationship with TSMC; Toshiba's expanding relationship with Winbond Electronics; Hitachi's Singapore fab, with participation by Nippon Steel and the Economic Development Board of Singapore; and Oki Electric's licensing agreement with the Nanya group.
Though the outsourcing trend has been important to Japanese companies seeking to leverage their technologies, they are being careful to maintain their own core manufacturing skills, Minamikawa said. - Mark Carroll contributed to this story.
Copyright (c) 1997 CMP Media Inc. |
