The die-shrink race in DRAMs. If your competitor goes to .18 micron, you gotta go there too or get outta the business!!!
techweb.com
Micron DRAM Ramp-Up Worries Competitors
(12/21/98, 7:37 p.m. ET)
By Jack Robertson, Electronic Buyers' News
Micron Technology has doubled its output of 64-megabit
DRAM since midyear to more than 18 million units per
month, adding markedly to the increased supply already
coming out of South Korea, sources said this week.
OEMs and memory suppliers alike are watching
closely to see if the sudden influx will start eroding
DRAM prices once again.
Micron's rapid 64-Mb ramp surpasses the 35 percent to
40 percent output increases reported earlier this month
by the Big Three South Korean suppliers, Samsung
Electronics, Hyundai Electronics, and LG Semicon.
Having raised monthly production to 18 million units,
Micron is now neck and neck with Samsung as the
industry's leading 64-Mb producer, according to
observers.
And both companies are expected to increase 64-Mb
monthly output even more next year, albeit at a less
feverish pace, as continued die shrinks yield an ever
greater number of chips.
Micron's latest increase is concentrated predominantly at
its Boise, Idaho, fabs, with a nominal number of ICs
coming from lines the company acquired from Texas
Instruments. A Micron spokeswoman said the former TI
fabs will be converted to 0.18-micron feature sizes,
which will sharply increase output in the next nine to 12
months. When fully converted, the newly acquired fabs
will again double Micron's output, she said.
Samsung is expected to keep pace with Micron's
continued 64-Mb production hikes. The company is
performing die shrinks as rapidly as possible through a
process conversion to sub-0.25-micron lines. Indeed, a
Samsung spokeswoman said much of the company's $1
billion 1998 capital-spending budget went to upgrade
existing fabs, with another $1 billion investment slated for
similar upgrades next year.
Samsung said it has no near-term plans to add new fab
capacity, and discounted a report in the South Korean
press that the company would renew construction on Fab
9 in Kiheung, which was postponed when DRAM prices
crashed. However, Samsung will double output at its
Austin, Texas, fab later next year to 25,000 wafer starts
per month when it completes the second stage of its
construction plan there.
The relentless DRAM-production contest is fast
outstripping the ability of other chip makers to keep pace,
said observers. Japan's DRAM companies, for example,
are also raising 64-Mb output. But even that country's
largest producer, NEC, is capable of only about 10 million
units per month.
Some analysts believe such a production disparity could
change the DRAM industry's market dynamics, as a few
high-volume producers return to profitability by spreading
costs over a far broader base of chips than their smaller
competitors.
The latest surge in 64-Mb production is most likely being
absorbed by OEMs that are ramping PC production for
the holiday season, sources said. Weekly spot-market
pricing surveys from Dataquest, in San Jose, Calif., and
the American IC Exchange, in Aliso Viejo, Calif., both
showed that 64-Mb prices are holding steady.
However, many analysts expect the booming supply to
drive down 64-Mb prices in the first quarter of 1999 as
demand tapers off after the holiday rush. Additionally,
Micron's steep ramp has caused it to sell 64-Mb chips
into the spot market for the first time since late summer,
brokers said.
Already, memory-module manufacturers have reported
that some DRAM producers are negotiating slightly
lower 64-Mb prices in advance of the possible
post-holiday market slowdown. And a few OEMs have
begun shedding excess inventory after ordering too many
parts, which has driven certain DRAM module prices
down by as much as 10 percent, the module makers said.
While most of the market's attention is centered on
64-Mb DRAMs, prices for trailing-edge 16-Mb chips-and
fast-page-mode and EDO versions of all
densities-have continued to inch up. Indeed, some
suppliers, such as Oki Electric Industry, say they hope to
maintain a profitable business by selling older-generation,
1- to 16-Mb DRAMs for several years to come. |
