Betty and Ibexx,
Back to good old posts. That one's not very positive (nor very new, indeed).
Regards,
MiB
(OT : I chickened out of AMZN at $75, having entered at $48)
techweb.com
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Clairvoyant's View: Not Too Clear -- Some prognosticators
see a single architecture in the DRAM industry's future,
while others expect market fragmentation.
Carol Rosen
It's hard to predict the future if you're looking into a mud-spattered crystal
ball. Such is the problem people face today in trying to figure out in which
direction the troubled DRAM market is likely to go.
Many DRAM suppliers and analysts believe the high-volume PC market will
remain essentially anchored to one specific DRAM architecture, reprising the
roles played in the past by such technologies as EDO and, more recently, by
SDRAM.
But a growing number have a different take. They believe the DRAM market
will fragment, and in fact is already doing so. These observers expect the
market to be composed of at least two major DRAMs, possibly containing
different cores and each grabbing a substantial share of PC demand.
Which, if either, of these prognostications turns out to be correct will depend
on the development of several factors.
Right now, as everyone is painfully aware, there is too much production
capacity, and DRAM prices are in the cellar for the third year in a row.
DRAM suppliers are just hoping to make it through another week or month
without rupturing a major profit artery.
The Asian financial crisis has worsened matters, forcing severe curtailment in
capital spending, particularly by Japanese and South Korean companies.
In response, some DRAM suppliers are doing what they can to shrink die in
order to eke out a small profit in the face of decreasing available funds for
future-generation research.
And given these current market misfortunes, there is uncertainty about which
type-or types-of DRAM will dominate the next generation, as well as when
demand for that technology will kick in.
Who's on first?
Depending on whom you ask, the dominant next-generation DRAM will be
double data rate (DDR) DRAM, Rambus DRAM (RDRAM), SLDRAM, or
at least two of the above. As for what succeeding generations might look like,
some predict that question will be pushed to the back burner or relegated to
low-level research until the market improves.
Intel Corp. also has a say-particularly about architecture and chipsets.
Most observers expect that Direct RDRAM (DRDRAM) will be ready by
mid-1999, along with an enabling chip- set from Intel. But no one seems
certain whether availability of and demand for DRDRAM will be in proper
sync.
Some analysts claim DDR will displace the RDRAM after SDRAM loses its
popularity; they suggest this period could last from six months to two years.
Others expect devices designed to meet the PC-100 specification to extend
the SDRAM's life. This camp projects that DDR will take a small share-less
than 20%-of the total DRAM market.
But most prognosticators expect that DRDRAM will grab a good portion of
the market. When, to what extent, and whether it will share the spotlight with
other technologies remain unanswered.
The push to develop low-latency DRAMs indicates to some that demand will
diverge along two lines: A large number of buyers will demand DRDRAMs,
while an equally large number will require low-latency designs, depending on
the application. Others see niche applications such as embedded DRAM
continuing to grow and capture market share. (See sidebar on page 50.)
Major wild cards are capacity and capital investment. Typically, a down cycle
has been a time for suppliers to add capacity and equipment, and to set up
new processes to meet anticipated demand for higher-density and
higher-performance devices.
But in the past three years, most companies haven't increased capacity or
added equipment. Some, like Texas Instruments Inc., have left the market
altogether. Other large suppliers are idling capacity, and some have shut plants
or fab lines.
However, when market conditions improve and demand strengthens, DRAM
makers may have to take costly measures to ramp up production of new
devices. In such an environment, economies of scale will be hard to achieve,
and prices may climb.
Changes afoot
Historically, only one type of DRAM has dominated, with niche applications
filling in the remainder of the market in bites of less than 10% or 15% each.
Typically, only one device, such as EDO or SDRAM, most suits PC design
engineers at any given time.
Recently, however, that has begun to change. Many high-end PC,
workstation, and mainframe design engineers, for example, have found that
EDO works as well for them as does SDRAM. It has the performance they
require and is less expensive. But this situation could change as suppliers
continue to scale down production of older DRAMs.
Other changes are afoot. DRAM suppliers previously designed the memory
devices and let OEMs work out a way to integrate them into their systems.
But today's system designers dictate to or work closely with DRAM suppliers
to ensure that their needs and specifications are designed into newer
memory-chip architectures.
Early SDRAMs were not compatible or drop-in replacements for each other.
Intel and OEMs found this unacceptable.
The current solutions for next-generation DRAM designs all are compatible.
So compatible, in fact, that Intel, Rambus, and several suppliers expect
DRDRAM to provide memory solutions for the next five years.
Intel chose the interface design to meet a series of criteria based on
performance, cost, flexibility, and various other factors, according to a
spokesman for Intel, Santa Clara, Calif. "Direct RDRAM meets those criteria
for the next five years. We chose it because we found that those requirements
provided flexibility and headroom for the future," he said.
Currently, Intel is focusing on the PC-100 specification, "but we're definitely
keeping an eye on the landscape. We're constantly working with the entire
industry to support new and emerging technology," the spokesman said.
Rambus Inc., like Intel, takes the view that one major technology will
dominate in the next five years. "DRAMs are a commodity product, and most
DRAMs go into PCs; 55% of all DRAMs go into PCs, and the dominant
architecture will be the one that wins the PC market," said Billy Garrett,
product planning manager at Rambus, Mountain View, Calif.
He's confident that the Rambus interface will be the one, and that chip
suppliers will release parts using this technology through the 1-Gbit density.
"We have one part providing all the bandwidth, and we go to more channels
to increase bandwidth; it's evolution in memory controllers with DRAM
arrays."
Rambus obviously hopes to keep subsequent generations of devices using its
architecture in the demand mainstream for more than five years.
"Rambus is optimized to [PC] systems that will debut in the year 2000, and it
will coincide with the dominant market share," said Michael Sporer, technical
marketing manager for memory at LG Semicon America Inc., San Jose. "It
will have a long life.
"In two or three years, we'll start thinking about the next generation of
architecture. Whether it's proprietary or open-standard depends on the
DRAM industry," Sporer said. "Rambus has certain technical and
performance advantages, but it's the compatibility of these DRAMs that will
make it wildly successful."
New rule makers
"[In the old days], customers could tell us what they needed, when they
needed it, and why," said Jim Sogas, director of product marketing for
memory at Hitachi Semiconductor (America) Inc., Brisbane, Calif. "What's
changed is [that] the big driver for DRAM is the PC, and the control of design
decisions has gotten into a third party's hands. Intel is making decisions in
place of the clear decisions we used to receive from our customers."
The PC market has changed in that there is little differentiation in the
hardware.
"Open standards allow OEMs to buy parts from anyone and assemble their
PCs," Sogas said. "It creates some problems for DRAM makers; it's caused
problems and will cause more before it stabilizes."
Sogas would like to see DRAM makers more involved in the design process,
but he doesn't contemplate any chance of returning to the older methods.
"Instead of system designers and box builders, some of the leading PC
companies today characterize themselves as the sales and marketing arm of
the PC industry," added an industry source who asked to remain anonymous.
"Too often these companies are moving more into the logistics and fulfillment
arenas instead of offering customers technical value," he said.
Other DRAM suppliers describe the situation differently. They claim to be
part of a relationship that began years ago when customers wanted ideas
about improving system performance.
"[In the past, our customers] asked us questions about cost, performance, and
so forth two to three years down the road," said Kevin Kilbuck, memory
engineering manager at Toshiba America Electronic Components (TAEC)
Inc., Irvine, Calif. "We certainly have input, but we don't decide what they will
use in their system; we have to work together."
But, today, chipset support is more critical than memory. "Our number one
priority is to provide solutions for that market," said Jeff Mailloux, DRAM
marketing manager at Micron Technology Inc., Boise, Idaho. "How it dictates
what those requirements are is something we all have to work with. It's driven
by the chipset approach, and that's driven by Intel."
This situation, however, is likely to reverse itself, said Sam Chen, director of
engineering at Mitsubishi Electronics America Inc., Sunnyvale, Calif. "Intel is
the technical provider for the PC industry. When the industry has grown to a
certain extent, IP will dominate system technology, and that will not be
welcomed by system houses.
"There's a potential conflict," Chen said. "If this continues and Intel has all the
system IP and PC makers don't innovate, then sooner or later they will lose all
the IP to Intel. I don't see this happening to major system houses, like IBM, in
the future," Chen said.
Is compatibility the answer?
Within today's PC industry, different platforms are starting to require different
memories. This explains the current preference for PC-66 and PC-100
SDRAMs, which some analysts expect to remain popular for at least 18 to 24
months.
Others expect DDR, a direct evolution from SDRAMs, to reap the next
demand sweep; still others predict that DRDRAMs will come on next year
with demand ramping quickly. DRDRAMs will meet the need for PC
applications requiring higher bandwidths, but demand won't take off before
2001, according to Sherry Garber, senior vice president at Semico Research
Corp., Phoenix.
But Garber believes that the lack of supplier capital investments over the past
three years will have a more certain impact.
Suppliers concurred and noted that R&D, either for shrinking die or
developing processes, has pre-empted capacity expansion and, in many
cases, new-equipment additions.
Samsung gives R&D top priority in terms of expenses, said Avo Kanadjian,
vice president of memory marketing at Samsung Semiconductor Inc., San
Jose. "In a company like ours, cutbacks are implemented in nonsemiconductor
areas first, and when it's applied to semiconductors, it's more applicable to
capital expansion."
Die shrinks have been a priority recently for Hyundai Electronics Inc. in an
effort to bring costs down and increase profits, said Farhad Tabrizi, director
of strategic marketing at the San Jose company.
The combination of the Asian financial crisis and low DRAM prices has
shrunk investment monies significantly, reducing Hyundai's ability to invest in
new assembly lines, packaging, or architecture.
"There's not enough money to invest in new architectures and infrastructure
modifications; [this has delayed] our move to new, revolutionary products,"
Tabrizi said.
And, if the market continues to decline, there will be further investment
cutbacks next year, according to Jamie Stitt, TAEC's DRAM marketing
manager.
Observers expect some market consolidation next year. Even Taiwan-based
companies that have publicized relatively aggressive investment plans are
starting to cut back on those commitments.
"New capacity is dependent on market conditions. When the market warrants
it, we'll add fab capacity," Micron's Mailloux said. "Until then, we won't move
forward. In the past, DRAM investment was distorted because it wasn't
financed off the DRAM business, it had government or conglomerate backing.
That's changed too; the DRAM business has to pay for itself, there has to be
enough profit. People [right now] can't afford to invest in new technology and
new factories."
-Carol Rosen is a freelance writer based in Santa Clara, Calif.
Copyright r 1998 CMP Media Inc.
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