Seismic changes in PC rock chip world -- System makers face supply crunch as they race toward transition to Rambus DRAM
Anthony Cataldo and David Lammers
Tokyo - As the PC industry begins its countdown to Direct Rambus DRAM technology, companies are already grappling with the specter of a supply crunch for the devices. The irresistible force of brisk demand from PC makers keen to upgrade their high-end systems is about to crash into the immovable object of continued problems faced by DRAM vendors in getting the new technology out the door. The result, observers said, will be a severe shortage that will result in excessively high price premiums.
Intel Corp., for its part, is putting into action its insurance program against shortages: the S-RIMM, which would allow the PC/100-specification SDRAMs to be used on a Rambus In-line Memory Module (RIMM). An Intel spokesman said the S-RIMM option would become available "roughly at the same time as the chip set" that supports RDRAMs, underlining the word "roughly." He said that the S-RIMMs are to be viewed as a stopgap, transitional module, with "the final goal continuing to be using only the Direct RDRAMs."
Those S-RIMMs would require an ASIC-which Intel has developed-and would allow the PC OEMs to go ahead and put newly designed systems on the market in time for PC Expo, set for June in New York City.
One source said that some of the larger PC OEMs have made it clear to Intel that they want a supply of S-RIMMs available, populated with PC/100 SDRAMs, so they can proceed with their next-generation system designs. One source at a systems vendor said that his company is designing a Rambus- based system that emphasizes videoconferencing capabilities, using ASDL and taking advantage of the higher memory bandwidth. But those designs will not be brought to market if a parts shortage made it impossible to meet demand.
"It is in Intel's best interest to go ahead with the S-RIMM option. That way, computers can go out to the market with Intel's new CPU and core logic, and the OEMs then would be able to better plan their supply chain," said one source.
Industry watchers say the big names like IBM, Compaq, Dell and Hewlett-Packard are in a horse race to be early adopters of the Direct Rambus technology, a meet that will kick off as soon as Intel begins shipping its first Rambus-enabled chip set in the second quarter. Though the PC OEMs are reluctant to comment, several of them are expected to have prototype systems ready by the second quarter and desktops on the market as early as June featuring the Katmai processor-recently named Pentium III-the Katmai New Instruction Set, DVD-ROM drives, USB ports and advanced 3-D graphics.
"The schedule is looking good to ship systems in the April-to-June quarter," said one source at a midsize memory-module maker. "The party is going to happen. Intel and Rambus were the ones pushing it, but now Dell and Compaq are the ones in a hurry, and they're going to make it happen."
A Dell spokesman declined to comment.
With so many top-tier OEMs jostling in the same space, DRAM vendors predict a parts shortage will be inevitable.
"We see a severe supply shortage at this time," said Hajime Sasaki, senior executive vice president of NEC Corp., here. "I'm not sure what the supply-demand balance is for Direct Rambus, but there could be a potential shortage."
Avo Kanadjian, senior vice president of marketing at Samsung Semiconductor (San Jose, Calif.), said Samsung expects to be the dominant supplier, but acknowledged that minor revisions are still needed to get Rambus modules out in volumes.
"I think there is a lot of concern in the industry, stemming in part from the initial test results," he said. "Rambus introduces a lot of new concepts: a heat spreader on the module, the micro-BGA package, test requirements and so on."
The ability of Asian DRAM makers to invest in test and assembly equipment is another issue. Subodh Toprani, marketing vice president at Rambus Inc. (Mountain View, Calif.), said the back-end requirements for Direct RDRAM will require an investment of about $8 million to $10 million per million units per month-or several hundred million dollars total-to get the packaging and test equipment in place this year.
Toprani acknowledged that at this point, suppliers are shipping limited quantities-"tens of thousands of Direct RDRAMs per month." But he predicted the leading DRAM vendors would go for it.
Few chip makers were willing to say publicly how much Direct RDRAMs will cost when they start to ship this year. But at least one PC vendor said the price is 40 percent higher than standard 64-Mbit SDRAMs, and some DRAM vendors have quietly said that 50 percent is more like it.
That's a double-edged sword for DRAM makers. On the one hand, it offers a welcome opportunity for price gains early in 1999. But the transition is proving so challenging that many top companies are opting to push back mass production till dangerously close to the debut of Intel's chip set-or, in some cases, after. Intel will ship a second revision of its Camino chip set in the second quarter.
"The PC OEMs have two concerns," said Dean McCarron, a principal analyst at Mercury Research (Phoenix). "Adequate supply of the Camino chip sets from Intel, and the ability of the DRAM vendors to accomplish a steep ramp on the RDRAMs. The DRAM industry has to get to volumes on the RDRAMs, realistically speaking, by the end of this year, and that is a steep ramp over three quarters."
Problems cropping up now are making people nervous. An executive at one module maker said his company was getting very few RDRAMs, too few to really shake out its module test and assembly lines.
Sheri Garber, memory analyst at Semico Research (Phoenix), said that as of this month, several OEMs had not received enough chip sets and RDRAMs to begin their testing programs. Dell Computer (Austin, Texas) was one of the few that had, leaving its competitors chomping at the bit.
"As of last week, Dell was probably in a unique situation," Garber said. "Our info is that the other major OEMs, including Compaq, IBM and HP, were still waiting to get all the components they needed.
"By 2000, perhaps in the second quarter, things will be better," she said. "But for this year I think we are looking at a painful situation."
One of the biggest problems DRAM makers face is that the Camino chip set will arrive just as they start to shift to the 128-Mbit generation. Some vendors don't feel it's worth their while applying the new technology to a memory density that will soon be displaced.
Micron Technology (Boise, Idaho) said it does not plan on 64/72-Mbit Direct Rambus parts. Instead it will produce 128-Mbit devices when it brings up its 0.18-micron line in the second half of 1999, said Jeff Mailloux, DRAM marketing manager.
"The 128-meg SDRAMs are shipping in volume, so why would you take a new technology like Rambus and use it in a lower-density product?" he said. A spokeswoman added that Micron has not changed its tune despite a $500 million equity investment from Intel last year that was tied to development of Rambus technology.
Mailloux sees "a lot of challenges to Rambus" in terms of investment and "technically how the ramp proceeds." Needed are new testers at several million dollars each, chip-scale packaging and modules that require X-ray inspection of the solder joints. Also, vendors have to contend with larger die sizes and higher frequencies, two factors that can reduce yields.
"We've been talking about the die-size adder and packaging and testing costs, and building the RIMMs with a heat sink, plus tighter tolerances for pc boards. It does look like a 40 to 60 percent cost adder by the time all is said and done," Mailloux said.
Even DRAM makers that were early licensees of Rambus and have experience with producing the parts are holding back. Toshiba Corp., one of the first to announce working samples of 72-Mbit parts last year, now says it won't produce RDRAMs in volume till the 128- and 144-Mbit densities at the end of the second quarter or early in the third. The company is providing 72-Mbit Direct RDRAMs now, but only for evaluation samples.
"We anticipate Rambus DRAM will take off in volume from 128 or 144 Mbit, so we would rather start mass production from that generation," a spokesman said. Toshiba will move to a 0.2-micron process for the higher-density parts, the spokesman said.
Hitachi Ltd. also will wait until some time in the next fiscal year, which begins April 1, to start producing 128- and 144-Mbit Direct RDRAMs. The company has been ramping up its 0.18-micron production capacity since late last year, but has opted to use this leading-edge capacity initially for PC/100 and 133-MHz SDRAMs.
Fujitsu Ltd. will zero in on standard SDRAMs. The company recently announced it will begin volume production of 0.22-micron 133-MHz SDRAMs in February. A spokesman said Direct Rambus plans are still being determined.
Part of the trouble may arise from the fluctuating specifications for the Direct Rambus device, forcing vendors to make changes to the sophisticated bus architecture.
Earlier Rambus devices placed the data and command signals on the same multiplexed bus. Direct Rambus uses three distinct buses to handle the data transfers, row commands and column commands, said Michael Sporer, technical marketing manager for LG Semicon (San Jose). "With every company having to make changes to the logic, it's helping everyone stay in lockstep and is keeping one company from being a leader," Sporer said. "As soon as you make progress, there's a new tweak you have to make."
With so many top vendors skipping the 64-Mbit generation, a disproportionate burden is falling on the handful of suppliers that will deliver early 72-Mbit parts. Among them are NEC, Mitsubishi Electric and LG Semicon.
Kanadjian said Samsung is putting all its resources this year into the 128/144-Mbit generation. The 144-Mbit parts include one extra bit, per byte, for error correction. Kanadjian said Samsung is finding that about half of the demand is for the 144-Mbit configuration. Some say error correction is more needed in the Rambus architecture than in SDRAMs.
NEC plans to increase its volume of 72-Mbit devices from 100,000 to 1 million a month by the first half of 1999 on its 0.22-micron process technology. The company will shift to a 0.2-micron process in the second half to produce 128- and 144-Mbit versions, a spokesman said.
Copyright ® 1999 CMP Media Inc.
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