NEC hikes 64-Mbit production; DRAM recovery could stall, warn analysts
A service of Semiconductor Business News, CMP Media Inc.
Story updated 1:30 p.m. EST/10:30 a.m., PST, 5/27/99
TOKYO--NEC Corp. here said it will match the huge DRAM production ramps at Micron, Samsung and Hyundai by boosting its own 64-megabit output 150% to 30 million units a month by mid-summer 2000.
The steep increase in NEC production will pour more DRAMs into the saturated memory market , said analyst Mark Edelstone, who tracks the semiconductor industry at Morgan Stanley Dean Witter & Co. in San Francisco. As a result, Morgan Stanley has pushed back its forecast for a recovery in DRAMs, and it now says that won't occur before the end of the year.
Until this week NEC had maintained it was holding down 64-Mbit production at the current level of 12 million chips a month because of the low selling prices.
The about-face means NEC is joining Micron Technology Inc. and its Korean DRAM rivals in driving up production rates. A glut of DRAMs during the past several years played a major factor in the stalled growth of the chip industry. The glut seemed to be working itself off until recent weeks, when Korean suppliers began responding to Micron's aggressive ramp of production. Now NEC is joining in the DRAM market share battle.
"The DRAM market will come down to four major suppliers, with everyone else scrambling for specialty or niche products," said analyst Sherry Garber with Semico Research Corp. in Phoenix.
Many industry and financial analysts have said the overall semiconductor recovery appears to be on track, but DRAMs remain an area of concern, especially if an intense market share fight erupts in the second quarter.
An NEC spokesman today stressed that the Japanese firm will accomplish its sharp production growth through die shrinks and manufacturing efficiencies in existing fabs. NEC has no plans to add any new fab capacity, he said.
The die shrinks and technology advances will allow NEC to increase its bit growth up to 80% a year, according to the spokesman. This is similar to the 80% bit growth rate that Micron has been projecting. Analysts said Micron's target will bring the U.S. firm to a production level of between 45-to-60 million 64-Mbit DRAMs a month in the year 2000. --Jack Robertson
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