Hyundai Predicts DRAM Shortage By End of 1998
From Page One of Electronic News: April 13, 1998 Issue
By Will Wade
San Jose, Calif.--The beleaguered DRAM industry might be heading for a turnaround. At least one major company is predicting shortages of the commodity memory chips and rising prices by the end of the year.
That's good news for the entire memory market, but will be especially good news for the companies that have the equipment and means in place to add capacity by early 1999. Many companies have been cutting back on capital spending this year, and the next several months may see memory manufacturers beginning to jockey for position in preparation for an upturn in the market.
"Our analysis shows a continuing oversupply through the second and third quarters, but by the fourth quarter of this year we are starting to see a shortage," said Mark Ellsberry, VP of memory marketing at Hyundai Electronics America. "I know that this prediction means I am going out on a limb, but I really feel this is going to happen."
Mr. Ellsberry noted that several Japanese and Taiwanese companies have begun cutting back on production of lower density DRAM devices, especially 16-megabit and smaller, partly in response to falling prices and partly because the industry is transitioning to 64Mb chips. Hyundai as well is making a shift, and expects to see more than half of all its DRAM bits shipped in 64Mb chips by June. "We think people are cutting back or converting their DRAM capacity, and that will lead to a shortage," he said.
If this turns out to be the case, the big question will be which firms are positioned to capitalize on this shift. In the wake of last year's Asian flu, most memory companies in the Far East have cut back on their capital spending. Some estimates indicate Korean companies have trimmed expenditures by up to 60 percent over last year, while Japanese companies on average have cut back by about 40 percent and Taiwanese firms have slashed capital spending by 20 percent or more.
However, both Hyundai and memory giant Samsung Semiconductor have recently opened fabs in the United States, while another Hyundai fab project in the United Kingdom was put on hold when the company was unable to obtain financing to complete the facility at the end of last year.
The largest American company, Micron Technology, is increasing its capacity right now by about 40 percent this year, measured in bit growth, but this is from improving its production technology rather than by adding more manufacturing capacity. "We have no current plans to add wafer starts," said spokesman Kip Bedard.
Micron's estimates show demand for DRAM picking up about 80 percent this year, and while the company has not predicted any immediate market turnaround, Mr. Bedard said he was encouraged by the decline in capital spending. However, even without more fabs in the industry, he noted that all the other companies manage to increase their own capacity year over year through improved process technology.
In the meantime, Micron is going ahead with plans to launch a half-generation 128Mb chip later this year, a device that may arrive just in time to capitalize on any imminent shortages. |
