Skeeter,
This may be old news to to all but but I am sure that MU will have their own spin on this. I suspect that the immediate impact is not really felt till next month.
don ryndak
November 30, 1998, Issue: 1137
Section: News
Koreans boost DRAM output
Jack Robertson
After months of cutting back DRAM production, South Korean chip makers
are suddenly hiking 64-Mbit output to record levels, leaving rivals to wonder if
the increase will disrupt a new and precarious period of pricing stability.
The production spike, which varies from 25% to 40% depending on the
supplier, has been attributed to a variety of factors, including a desire by South
Korean vendors to cash in on firmer DRAM prices, a need to amortize costs
over larger IC shipments, and a natural outgrowth of a shift to finer chip
feature sizes.
Analysts, and even vocal rivals such as Micron Technology Inc. chairman,
president, and chief executive Steven R. Appleton, had earlier credited the
South Korean manufacturing cutback with stabilizing the market. Indeed, for
the past few months, 64-Mbit DRAM prices have shown signs of a
resurgence, increasing from the low $9 range to well over $10 on the spot
market, according to independent distributor American IC Exchange, Aliso
Viejo, Calif.
The firmer prices even gave rise to a report that swept Wall Street recently,
speculating that a tighter 64-Mbit supply would prompt Micron to raise its
prices. Micron responded by saying that it defers to the global DRAM market
to set purchase prices.
Now, however, with South Korean vendors turning on the production spigot
once again, the anticipated surge of memory chips could unravel some market
projections that are indicating higher DRAM prices for 1999.
Bruce Bonner, an analyst at San Jose-based Dataquest Inc., said the jump in
output is designed to take advantage of a seasonal uptick associated with
fourth-quarter OEM demand. Holiday demand can accommodate the
production increase without upsetting the market for now, Bonner said.
"The big question is what happens in the first quarter of 1999, when demand
historically turns down," he said. "If the Korean companies continue to
produce DRAMs at the same high levels, there could be an adverse impact on
prices."
Analyst Steve Pelayo of Morgan Stanley Dean Witter Equity Research,
Menlo Park, Calif., agreed, noting that the South Korean DRAM ramp-up
along with the post-holiday demand drop could once again depress memory
prices.
Just what is driving the South Korean policy reversal is open to question, but
one thing is certain: Output levels are on the rise.
The industry's leading DRAM maker, Samsung Electronics Co. Ltd.,
confirmed last week that after having cut production to 12 million units
monthly, it will now boost 64-Mbit output 40%, to 17 million units, by the end
of the year.
LG Semicon Co. Ltd. said it will increase 64-Mbit DRAM production 36%,
from a low of 11 million units per month to 15 million units, by year's end. And
Hyundai Electronics Industries Co. Ltd. will also raise monthly production, to
15 million units-a 25% increase-by the end of the year, according to a
company spokesman.
A spokesman for LG Semicon said his company is aiming to take advantage
of higher 64-Mbit prices to get better margins on its memory chips. He added
that increased output will help lower costs by spreading fixed expenses over a
larger number of chips.
The jump in DRAM production is also the inevitable result of a rapid shift to
sub-0.25-micron feature sizes, which can yield as many as 30% more
64-Mbit DRAMs per wafer. Samsung started making chips on a 0.22-micron
process in July, and Hyundai followed in September. LG Semicon said it is
also producing 64-Mbit DRAMs on 0.22-micron lines and will move to 0.20
micron by the end of the year.
Samsung is also adding fab capacity at its Austin, Texas, facility, doubling
production later next year to 24,000 wafer starts per month.
Hyundai and LG are locked in a battle to see which company can gain the
better position in the chip market. The victor could be granted a controlling
interest when the companies' semiconductor operations are merged under a
plan outlined earlier this year.
---
South Korea's
New DRAM Production Plan
-Samsung will increase 64-Mbit production 40%, from 12 million to 17 million
units a month
-Hyundai will raise monthly output 36%, from 11 million to 15 million 64-Mbit
DRAMs
-LG Semicon will hike manufacturing levels 25%, from 12 million to 15 million
units monthly
Copyright ® 1998 CMP Media Inc. |
