64M question/ Is market too crowded?
Well that is the title of the below article
1) Japanese cranking out PC100 64Mb by summer...
2) Will people buy $3000 BX systems?
3) Memory market in OVER OVER supply
4) $7 prices seen for 64Mb
5) SELL SELL MU...
March 24, 1998
Nikkei English News via NewsEdge Corporation : Nikkei Weekly-copyright Nihon Keizai Shimbun,Inc.
64M question: Is market too crowded?
DRAM makers rush to switch to new type; prices already falling
The race is on among producers of 64-megabit dynamic random-access memory (DRAM) chips, and already there are signs that they may be running straight into oversupply.
In a bid to revamp their stagnant memory businesses, Japanese semiconductor makers are accelerating their shift from 16M to 64M DRAMs.
Japanese leader NEC Corp. has decided to double 64M-DRAM production by the end of the year. With Toshiba Corp. and Mitsubishi Electric Corp. likely joining in, 64M chips probably will surpass 16M chips in volume by summer.
Early slide
Prices on 64M DRAMs, however, have already slid to around 1,500 yen (11.54 dollars) - well before the chip supplants the 16M DRAM as the mainline product.
In the past, 4M and 16M prices have remained around 5,000 yen before generational changeovers have occurred.
But prices of 64M DRAMs keep sliding, dragged down by the collapse of the 16M market.
NEC, for one, is boosting 64M production at its memory plants around the world, raising monthly output from the current 5 million units to just over 10 million by the end of the year.
With similar plans afoot at Toshiba, Hitachi Ltd., Fujitsu Ltd. and Mitsubishi Electric, the five major semiconductor makers' combined monthly output is expected to increase from 17.5 million chips in March to 40 million by the end of the year - twice as large as 16M DRAM output.
As the rush into 64M chips is fueled by an anticipated recovery in memory prices by summer, the makers are striving for the lead in the initial race.
But it remains to be seen whether 64M DRAMs can save all or even one when each maker is striving for the same brass ring.
NEC, which is planning by far the largest production increase, said about 90% of its 64M products are high-speed chips that enjoy a competitive edge and are thus unlikely to suffer price drops.
The high-speed DRAMs are designed for Intel Corp.'s latest line of microprocessors, to be shipped starting this summer.
"Only NEC and Samsung Electronics Co. of South Korea are ready for mass production," said an NEC vice president.
Toshiba and Hitachi concur, saying that because simple, general-purpose chips do not make up a high proportion of total output, prices should hold at a certain level.
But their products will likely end up more or less identical, because the makers all aim to profit by catering to high-end personal computers running Intel's new chip.
Despite the attempt to depart from general-purpose DRAMs, applications are still highly dependent on PCs, so the makers remain sensitive to any moves by Intel and Microsoft Corp.
The future outlook for PC demand is gloomy, as evidenced by industry giant Compaq Computer Corp., which shocked the industry by announcing a downward profit revision for this year's January-March period.
While PC demand continues to grow at a double-digit pace, there has been a conspicuous rise in inventory, especially in the North American market.
In addition, the booming market for sub-1,000 dollars PCs bodes ill for semiconductor makers, as the machines are potential rivals to the high-end PCs powered by Intel's advanced chip.
Given the situation, suppliers of PC parts will inevitably face intensifying pressure to lower prices. From a demand perspective, 64M DRAMs are an uphill battle.
Uncertain factor
South Korean makers are the uncertain factor. The plunge of that nation's currency and the subsequent International Monetary Fund austerity program prompted some analysts to predict that Samsung and other South Korean makers would abandon semiconductor investment for this year. The analysts have since abandoned that view, however.
For South Korean semiconductor makers, DRAMs are one of only a few strategic and competitive exports. Indeed, the president of Toshiba, Taizo Nishimuro, expects Korean players to take the offensive in order to earn foreign currency.
According to one Japanese manufacturer of chip-making equipment, Samsung is concentrating its limited foreign currency on 64M facilities.
Some analysts are now predicting that 64M prices could fall below 1,000 yen by the end of the year.
<<Nihon Keizai Shimbun, Inc. -- 03-23-98>> |
