05-18-98 Generational Shift Speeds Up in DRAM Mart
A generational shift in the global semiconductor market from 16-megabyte dynamic random access memory (M-DRAM) chips to 64M-DRAMs is expected to accelerate, partly because of the so-called ''bit-cross'' phenomenon, industry sources said yesterday.
The average prices of 16M-DRAM and 64M-DRAM chips are set at $3.3 and $12.8, respectively, for the second quarter of this year, indicating that the per-bit prices of the two memory chips have become virtually the same, according to the Nomura Research Institute in Japan.
The generation shift in the semiconductor market usually speeds up immediately after the bit-cross, the point when prices for two chips with different capacities become the same.
In the memory chip market, the price of 16M-DRAMs is not likely to drop further, since it has already fallen nearly to the level of production costs. Meanwhile, the price of 64M-DRAMs continues to fall steadily, the institute said.
The market for 16M-DRAM chips is expected to shrink by 25.4 percent this year, contracting to 1.77 billion units from last year's 2.23 billion. On the other hand, the market for 64M-DRAMs is predicted to experience hectic growth of 515 percent, swelling to 800 million units from last year's 130 million.
''Domestic semiconductor producers, who have the biggest market share in the global 64M-DRAM market, will probably engage in a tough battle with the Japanese, who are trying to compensate for their defeat in the 16M-DRAM sector by promoting 64M-DRAM sales,'' an official at the Korea Semiconductor Industry Association said.
In the meantime, the country's three major semiconductor makers' capital investment is expected to decline sharply this year because of the economic climate and the supply glut.
The combined capital spending by Samsung Electronics Co., LG Semicon and Hyundai Electronics Co. is projected to reach $1.5 billion this year, about one third of the figure a year ago, said sources in the semiconductor industry and Nikkei Microdevice of Japan.
The domestic semiconductor industry is forecast to shrink further from the latter half of 1999, when this year's sharply reduced capital investments will take effect, the Nikkei Microdevice said.
Capital spending by Japan's five major semiconductor makers, including NEC and Toshiba, is also expected to decline by 16 percent, falling to 600 billion yen from last year's 710 billion yen, Nikkei Microdevice said.
Global DRAM production is also expected to fall short of an initial forecast of 4.1 billion units, reaching 3.69 billion this year. The drop is attributed mainly the shrinking capital spending by the two major semiconductor-producing countries.
The demand for DRAM chips is estimated to reach 3.4 billion units this year and 5.4 billion in 1999, when demand will overtake supply. (STS)
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