In Asia, vacations and production cutbacks could reduce glut -- Tighter supply seen as restoring DRAM prices
Electronic Engineering Times,
by Mark Carroll, Yoshiko Hara and David Lammers
Taipei, Taiwan - Some observers are predicting a return to more normal
DRAM pricing, as a result of several of Taiwan's fledgling DRAM makers
being on vacation for the Chinese New Year, and Japanese producers
vowing to cut back 16-Mbit production.
Three of Taiwan's five dedicated DRAM producers, accounting for more
than 60 percent of Taiwan's DRAM capacity, planned five- to 10-day
closures during the lunar New Year that began last week.
"We'll shut down virtually all of our production for 10 days during
the Chinese New Year," said R. T. Lo, vice president at TI-Acer Corp.
(Hsinchu City), "because of the terrible price situation and to perform
yearly maintenance."
Powerchip Semiconductor Corp. and Nan Ya Technology Corp., two other
DRAM makers located in the Hsinchu science park, also will shut down.
As a result, some 5 million 16-Mbit parts will not go on the market.
DRAM powerhouse Hitachi Ltd. (Tokyo) announced suspension of
operations at eight DRAM fabs in Japan for eight to 16 days during
February and March, reducing 16-Mbit DRAM production by about 1 million
units per month.
"Slowing down production, here and in Japan and in Korea, will help
DRAM prices," Lo said. "However, even with a slowdown, the situation is
still pretty bad for DRAM manufacturers."
But Matt Cleary, a Hong Kong-based electronics analyst for Union Bank
of Switzerland said, "Even two weeks' loss of production won't solve
the oversupply problem. It may prop prices up for a short time, perhaps
a month tops, but the underlying problem of oversupply will remain."
After sharp price declines in December, particularly for 64-Mbit
DRAMs, the market rebounded somewhat in January. At mid-month, 16-Mbit
DRAM prices were back up to $3.10 to $3.40, from about $2 in December.
A Korean DRAM marketing manager said an EDO (extended data out) 64-Mbit
DRAM was priced at about $13 to $14 in late January, while synchronous
64-Mbit DRAMs fetched about $17 to $18.
After the December price cuts, Semico Research (Phoenix, Ariz.)
reduced its outlook for the DRAM sector in 1998, predicting 3.1 percent
growth for the year compared with an earlier prediction of 11 percent.
J.H. Son, who's in charge of Dataquest's Asia semiconductor service,
said 1998 "looks better than last year" for the DRAM industry. The
Seoul-based analyst said DRAM production will be up 20 percent this
year, to $26.64 billion, from about $22 billion last year. DRAM
revenues for 1998 should roughly equal those of 1996. The price
collapse that year resulted in a 38 percent reduction in DRAM revenues,
from $41.755 billion in 1995 to $25.843 billion.
One factor may be the industry's ability to squeeze more production
out of existing capacity. Using 0.25-micron process technology on
8-inch wafers boosts the number of 16-Mbit raw dice per wafer to about
1,000, compared with about 400 with the 0.4- or 0.5-micron process used
earlier. Processing costs remain roughly the same, at about $1,600 to
$1,800 per wafer.
Samsung plans to announce its super-shrink 16-Mbit part soon, small
enough to put about 1,000 dice on an 8-inch wafer, said Yoon Woo Lee,
president of Samsung Electronics' semiconductor division. Most of
Samsung's capacity has been upgraded with additional deep-ultraviolet
steppers, he said, giving Samsung 0.25-micron capacity in Austin,
Texas, as well as at three fabs at its Kihung complex near Seoul.
Hyundai Electronics will convert two existing fabs to 64-Mbit
production this year. Newer steppers, with deep-UV laser sources, are
the only significant equipment upgrade required, one source said.
Chi Luk (Lucky) Kim, vice chairman of the Korea Semiconductor Industry
Association, said Korea's semiconductor exports "hit bottom" in 1997
and will increase slightly this year on stronger prices, particularly
for synchronous DRAMs. PC servers and high-end desktops will boost
demand for 64-Mbit DRAMs this year, and bit-price crossover between the
16-Mbit and 64-Mbit densities will occur in the second quarter, Kim
said at a press conference in Seoul during the recent Semicon Korea
show.
But few dollars will be available for equipment until South Korea gets
past its liquidity crisis and the won strengthens. Because Korean
companies keep their financial books in won, the cost of equipment
priced in dollars has essentially doubled. Foreign currency must be
kept for materials which must be paid for in dollars.
Son said most Korean companies are waiting for the exchange rate to
improve to about 1,000 before buying equipment. The current exchange
rate is 1,600 won to the dollar, compared with about 860 won to the
dollar in mid-1997.
"Bringing in equipment from outside is really costly at these exchange
rates," said P. June Min, a semiconductor-industry consultant based in
Seoul. "Interest and depreciation costs are expensive. I think what
will happen is that Korean semiconductor companies will borrow dollars
outside of Korea and invest in their fabs outside of Korea."
Most of Japan's largest DRAM makers also have plenty of capacity. A
Fujitsu spokeswoman said memory-related investments will be curtailed
this year, mainly because a fab dedicated to synchronous DRAMs opened
recently at Gresham, Ore., while a flash-memory line was built in Japan
for Fujitsu AMD Semiconductor Ltd. (FASL).
"Next fiscal year's investments will be concentrated on R&D-related
ones," she said, referring to the 1998 fiscal year beginning April 1.
Because the DRAM makers are not capacity constrained, the move to
300-mm wafers is being pushed back as well (see Jan. 26, page, 1).
"Semiconductor investment has been excessive since 1993, so if
manufacturers cut investments this year, it will help stabilize the
market next year," said Akira Minamikawa, senior semiconductor analyst
at IDC Japan Ltd. "But companies are being careful not to tighten the
investment in development of next-generation process technologies, in
order to remain competitive with their overseas competitors."
A January rebound followed sharp price cuts in December.
Copyright c 1998 CMP Media Inc. |
