Intel Investors - Improving FLASH Memory pricing may HELP Intel's Q199 financials.
Intel has seen Flash Memory ASPs rise in the past quarter (Q199) and for the current quarter (Q299).
These improving conditions may help its bottom line - as we'll see in just 10 days.
Maybe AMD will get a badly needed boost as well !
After deferring equipment purchases last year in response to the Asian economic downturn, Advanced Micro Devices Inc. is likewise poised to ramp 0.25-micron linewidths at the FASL 2 facility in Japan that it operates jointly with Fujitsu Ltd., according to Kevin Plouse, director of technical marketing for AMD's memory group in Sunnyvale, Calif.
After deferring equipment purchases last year in response to the Asian economic downturn, Advanced Micro Devices Inc. is likewise poised to ramp 0.25-micron linewidths at the FASL 2 facility in Japan that it operates jointly with Fujitsu Ltd., according to Kevin Plouse, director of technical marketing for AMD's memory group in Sunnyvale, Calif.
After deferring equipment purchases last year in response to the Asian economic downturn, Advanced Micro Devices Inc. is likewise poised to ramp 0.25-micron linewidths at the FASL 2 facility in Japan that it operates jointly with Fujitsu Ltd., according to Kevin Plouse, director of technical marketing for AMD's memory group in Sunnyvale, Calif.
Paul
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Flash prices on the march as glut shows signs of ending
By Andrew MacLellan,
Electronic Buyers' News Apr 2, 1999 (12:26 PM)
URL: ebnews.com
Silicon Valley
After dictating terms to their suppliers for the past two years, cell-phone manufacturers are once again faced with rising prices for NOR-based flash-memory chips. With tags up 5% to 15% in both the spot and contract markets, a prolonged period of flash-IC overcapacity is drawing to a close, according to vendors.
"Our ASPs are up this quarter," said Curt Nichols, director of marketing for Intel Corp.'s flash-memory components division. "Prices pretty much across the product line are higher in Q1 and Q2 than they were in the fourth quarter, so there's been a rebound."
The uptick applies only to certain flash chips-namely, those used for code-storage applications. NAND-based flash ICs, which store data and are used primarily in digital cameras, voice recorders, handheld organizers, and the like, are still subject to severe price erosion, suppliers said.
NOR-based flash, however, which stores program code and represented nearly 80% of all flash-IC sales in 1998, according to Semico Research Corp., Phoenix, is experiencing strong demand, particularly within the cell-phone market. According to STMicroelectronics Inc., contract average selling prices for 8-Mbit NOR flash are trending toward $4.50, while 16-Mbit chips are selling for up to $6.50.
"Demand is so robust that customers, to ensure that they get their allocation, have agreed to pay more," said Eric Thun, director of memory marketing at Sharp Electronics Corp.'s Microelectronics Group, Camas, Wash. "It's very healthy," he added.
Just how long component buyers will have to endure rising prices is uncertain. While many profit-starved suppliers froze capacity-expansion plans during the past two years, a few invested in the down cycle and are poised to pour on new production beginning this year.
For the time being, however, flash ASPs are continuing to track upward for almost all densities-from 1, 2, and 4 Mbits to 8- and 16-Mbit devices.
According to several sources, Intel, Mitsubishi, Sharp, and other companies recently informed cell-phone customers in Japan that contract prices for certain higher-density devices will be raised by at least 10%. And one analyst said that prices for 1- and 2-Mbit flash used in PC BIOS is up 20% in Taiwan.
"The general trend is that prices are edging up. ... There has been definite movement," said Alan Niebel, an analyst with Semico Research. "This 10% price rise in Japan is really the first time I've seen a cell-phone price increase for OEMs in two years, or even more."
On the spot market, prices have also risen by 10% on average, according to Frank Cavallaro, vice president of sales for NECX, an independent distributor based in Peabody, Mass. "Most of the activity is taking place on the supply side, where we're seeing manufacturers increasing lead times," Cavallaro said. "If you had orders on the books for a particular lead time, those prices will be honored, but anything outside of that will result in a price increase by the manufacturer."
STMicroelectronics characterized the increase as a stabilization, saying that it has merely stopped dropping tags. Price erosion had been so severe that suppliers were forced to defer capital-expansion plans, which in turn has made it difficult for the industry to meet demand. A more balanced supply/demand picture will benefit both vendors and customers, the company said . "I'd say it's more of a price adjustment rather than an increase," said Pierre Matte, ST's director of memory marketing. "I think we're to the point where the customer can't expect prices to drop 10% a month or 10% a quarter. "Are they going to grow 20%, 30%, or 50%? I don't think so," Matte added. "It's more of a market coming back to a reasonable level of stability."
Because flash memory serves so many applications, it's difficult to determine how the increase imposed on cell-phone makers will be reflected in other markets. Equally hard to fathom is how prolonged the flash-IC price hike is likely to be.
Intel, for example, which ended 1998 with an industry-leading 28.9% of the flash market, according to Semico Research, is revving up production at its fab in Rio Rancho, N.M. The new facility, which is using 0.25-micron process technology, will increase the company's 1999 flash capacity by 75%, Nichols said.
Sharp ramped up its newest fab, in Fukuyama, Japan, two months earlier than planned to meet growing demand. This year, the company will have the capacity to start 60,000 wafers per month, and is just now moving to volume production of 0.25-micron linewidths-with a shift to 0.18 micron slated for later in 1999.
After deferring equipment purchases last year in response to the Asian economic downturn, Advanced Micro Devices Inc. is likewise poised to ramp 0.25-micron linewidths at the FASL 2 facility in Japan that it operates jointly with Fujitsu Ltd., according to Kevin Plouse, director of technical marketing for AMD's memory group in Sunnyvale, Calif.
STMicroelectronics is ramping 0.25-micron lines at an 8-in.-wafer fab in Catania, Italy; has capacity at two other facilities; and said it will move to a 0.2-micron geometry later this year. The company, which has yet to play heavily in the mass flash-IC market, is planning an aggressive push this year and expects to triple last year's $100 million sales revenue.
And Hyundai Electronics Industries Co. Ltd., a newcomer to the flash market, is ramping up modest volumes initially, but intends to dedicate a portion of its vast DRAM manufacturing might to drive prices down in the commodity flash segment.
Still, demand is so strong that even renewed investments are unlikely to dampen prices this year, according to several executives.
In stark contrast, the NAND-based flash market is still experiencing heavy price erosion, according to observers. Hitachi Ltd., which is pitching its proprietary AND-based flash technology into data-storage markets, said a drive to reach a $1/Mbyte cost structure by 2000 is keeping the pressure on vendors. Similarly, Toshiba, which sells NAND-flash ICs, reported no pricing increases, according to a spokesman. Vendors of NOR-based flash, meanwhile, indicated that they aren't likely to increase prices to the point of inflicting pain on their customers, but are looking forward to a return to profitability. |
