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Technology Stocks : Moderated Rambus -- Ignore unavailable to you. Want to Upgrade?

To: Jill who wrote (7)	8/28/2000 7:03:24 PM
From: Estephen	Respond to of 8

electronicnews.com NEWS: August 28, 2000 Memory Makers Look into Crystal Ball Companies make their bets for SDRAM, DDR and RDRAM By Steven Fyffe Memory makers are cashing in on the DRAM drought and preparing for the flood that will follow. "In 2002, it will be an oversupplied market, so all bets are off," said Bob Eminian, vice president of e-business solutions at Samsung Semiconductor Inc., San Jose, and general manager of MyMemoryStore.com . "We're expecting (an oversupply situation is) at most 15 months away." Unlike previous boom-and-bust cycles, most DRAM manufacturers agree the effects will not be as dramatic as in the past. "We're going to see much smaller peaks and valleys," said Farhad Tabrizi, vice president of strategic marketing and product planning of the DRAM business unit of Hyundai Electronics Industries Co. Ltd. of South Korea. The consolidation of the memory industry has left fewer small-time players to be bankrupted by hard times. "Today we've got four suppliers sharing 80 percent of the market. Those that want to play in it are taking up the other 20 percent," Eminian said. Hyundai is trying to tie down more big customers with long-term agreements to keep them loyal in times of plenty. Although, Hyundai believes an oversupply situation may be further away than Samsung thinks. "We predict next year there will be a very severe shortage," Tabrizi said. "We still believe that 2002 could be a shortage year." The high cost of making Rambus direct DRAM (RDRAM) is still causing controversy among memory makers. Micron Technology Inc. and Hyundai have come out strongly in support of the competing double data rate (DDR) technology. Even RDRAM's biggest supporter, Samsung, has said it will never be as cheap as DDR. "DDR has a better cumulative yield," Eminian said. "And Rambus is still a more expensive product to produce. We'll never see (the price gap between RDRAM and SDRAM) drop to less than 35 percent. DDR can theoretically go to zero." Micron said it is close to achieving that already. "We can see our way to making DDR for the same price as SDRAM in the first half of next year," said Jeff Mailloux, director of DRAM marketing at Micron. "We have been doing that already one-on-one with some key players." Samsung said it would produce 55 million to 60 million units of RDRAM this year, accounting for half of all production. Toshiba and NEC make up the other half, Eminian said. Rambus Inc., Mountain View, Calif., said it is happy with the current cost path of RDRAM. "The price gap has narrowed significantly," said Avo Kanadjian, vice president of worldwide marketing at Rambus. "The RDRAM price has continued to come down in an orderly fashion and we expect that price gap to narrow and be below 20 percent." But DDR will ramp faster than RDRAM next year, Eminian said. "Rambus is going to be about 5 to 6 percent this year. DDR is about 1 percent. Next year, we would expect both (RDRAM and DDR) to be in the 15 to 20 percent range. So DDR would be on a faster ramp than Rambus, starting from behind." Hyundai sees it slightly differently. Tabrizi predicts DDR will make up about 20 percent of the total DRAM market next year, while RDRAM will account for around 10 percent. Micron Technology Inc. will have a DDR run rate of 5 to 10 percent by the end of the year. Intel had put all its eggs in one basket with Rambus, while the DRAM industry had spread the risk of DDR, Micron said. "With the Intel-Rambus situation, you only had two companies doing a lot of work, trying to make sure it was ready to ramp and building performance," Mailloux said. "With DDR you have got hundreds of companies looking at it. That's the JEDEC production ramp model." SDRAM will still be king for the next few years though, Hyundai's Tabrizi said. "In terms of cost, because SDRAM has much larger volume, SDRAM will be cheaper. If the DDR demand grows fast, the premium drops off very fast. DDR will cross over SDRAM in 2002, and that's where it becomes a priority." SDRAM will account for 70 percent of the DRAM market next year, he predicted.