news...don't recall seeing this here. ebn is changing their slant.
techweb.com
May 03, 1999, Issue: 1158
Section: Viewpoints
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DRAM knot untied? Don't count on it
Matthew Sheerin, Editor In Chief
Procurement folks responsible for sourcing DRAMs are finding the market as puzzling and uncertain as it's ever been.
For more than three years now, OEMs have enjoyed a steady decline in the cost of memory, the result of an inventory tightening on the part of OEMs, and overcapacity on the part of the suppliers. Last fall, analysts predicted that prices would firm as memory makers put the brakes on expansion programs and Korea's Hyundai Electronics and LG Semicon merged their operations. It was also expected that OEMs would all be embracing the Rambus memory architecture. The results seven months later? You can check off the "D: None of the above" box.
Let's begin with pricing. As EBN reported last week, prices of 64-MBit PC100 SDRAM fell to a record low of $7.50 on the spot market, and OEM contract prices aren't much higher. There's still too much supply, distributors say, and this could put suppliers back into the loss column, forcing them to rethink production strategies going forward.
As for Hyundai and LG Semicon, don't hold your breath waiting for the companies to merge their chip businesses and put in place much-needed efficiencies. Under pressure from the Korean government, the rivals agreed to merge last September, but didn't settle on a price until late last month, when Hyundai agreed to pay $2.1 billion for its chip rival.
Noting that the two companies have very different approaches to design, manufacturing, and marketing, analyst Sherry Garber of Semico Research Corp. said it could take 18 months "to bring everything together." Their OEM customers should rightfully be concerned. Note to Hyundai and LG: Be prepared for tough questions.
Finally, the industry wasn't ready for the delay of Direct Rambus DRAM, and this is causing OEMs to make painful decisions about which memory chip to support in the coming months. The PC133 SDRAM design, which had been billed as an interim product, is now suddenly being looked upon as a necessary alternative to Direct RDRAM. OEMs, module makers, and some DRAM companies all confirm that while PC133 is still seen as an intermediate step, the interim period is now being stretched. Intel has delayed the launch of its Celeron chipset-to which the speedy Direct Rambus chip is closely tied-until September. Make no mistake, Intel and Rambus will win out in the long run.
Despite the slower speed of PC133 and the lack of Intel's support, it will create opportunities for some DRAM makers, but difficult decisions for OEMs and module makers.
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