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MARKETS
DRAM drubbing continues
By now, the nightmarish slide in dynamic random access memory
(DRAM) prices was supposed to be over.
Instead, no end is in sight, say analysts. Capacity will continue to
outstrip demand throughout 1998, warns Clark Fuhs, principal
analyst at Dataquest Inc. in San Jose. And DRAM makers continue
to invest too much in factories, adds Bill McClean, president of IC
Insights Inc. in Scottsdale, AZ. DRAM capital investments
comprise 41% of all chip industry expenditures, McClean contends,
even though DRAMs make up only 25% of the chip market.
To be sure, spending plans are being curtailed in Japan and
elsewhere, and a great deal of capacity has been taken off-line.
Mitsubishi, for example, said it was closing a U.S. wafer fab, the
Texas Instruments-Hitachi DRAM joint venture collapsed in
February and Motorola exited the market entirely. But much of
that capacity was for older 4-megabit and 16-Mbit chips, while new fabs for 64-Mbit parts are
still coming
on-line.
Perhaps the biggest culprit is the move to shrink die using 0.25-micron technology. Because the
shrink sharply boosts total chips per wafer, the move instantly increases capacity.
Some observers argue that Korea's economic crisis will constrict the flow of DRAMs, but
others doubt that will happen because the country needs the sales in order to generate dollars.
In addition, Korea does not want to repeat the past mistakes of the United States and Japan,
both of which failed to invest in DRAM technology during downturns, and consequently lost
market dominance.
Samsung, the giant Korean chip producer, is targeting $1.6 billion in semiconductor spending
this year, primarily for DRAMs, down from $2 billion last year, according to Keith McDonald,
vice president of sales and marketing for Samsung Semiconductor Inc., San Jose. Most of the
money will likely be spent in the second half of the year, by which time Samsung hopes the
Korean won will have stabilized, he adds.
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