Future challenge: Strategy and challenge for Taiwanese DRAM vendors

TAIWAN: Traced back from the history of Taiwanese DRAM vendors, Winbond is the first DRAM vendor established in 1987 and breed many talents for the industry. Taiwanese DRAM industry has rocketing in 1994 that PSC, ProMOS, Nanya are established and film the tight relationship with Japanese vendors.

Inotera and Rexchip is established in terms of JV of “Taiwanese-German” and “Taiwanese-Japanese” forms. Taiwanese monthly DRAM output had reached 530K at the end of 2008, which is 35 percent of total market. Taiwan is the most dense country for 12”inch fab. However, Taiwanese DRAM vendors has suffered the serious challenge in financial given the outrageous over-supply from 2007 to 2009.

According to DRAMeXchange, the research dept. of Trendforce, market share of Korean vendors has reached to 55.3 percent in terms of revenue in 2Q10, which is 10 percent YoY growth compared to 45.5 percent in 4Q08.

Taiwanese DRAM vendors have also enhanced the competitiveness in 2010, we have summarized as below:

Winbond is aggressively dedicating on non-commodity DRAM such as NOR Flash, Mobile DRAM, GDDR, and specialty DRAM. Given the shortage in NOR Flash, Winbond has successfully adjust product lines to secure the profitability. Scheduled to MP in 2011, Winbond will develop self-owned 46nm technology based on Qimonda’s 46nm technology.

Given the strategy to leveraging Taiwanese vendors against Korean vendors, the coloration relationship between PSC, Rexchip, ProMOS, Elpida will be tighter to speed up technology migration and ease the risk on price fluctuation. PSC plans to diversify product lines on commodity DRAM, foundry business and Flash that DRAM’s 45nm process will be adopted in year end.

We expect output and revenue will continuously grow with the 30 percent output contribution by Rexchip. 30K to 40K monthly output for foundry business will be achieved while 65nm technology will be applied in 2011. In Flash area, 50nm will be migrated in 2011 while 1Gb SLC and 16Gb MLC in 40nm is aimed at 2011 as well.

Rexchip is scheduled to turn to the commodity DRAM manufacturing facility of Elpida since Rexchip is officially the subsidiary of Elpida. Six immersion scanners is about to settle at end of 2011. 45nm technology will be fully migrated in 1Q11.

As for ProMOS, Tai-Chung Fab is back to full utilization at 60K by the year end. 30K is for 63nm outsourcing orders for Elpida. Elpida is considering to outsource low density mobile DRAM to ProMOS. Above 50 percent of ProMOS output will be scheduled for OEM orders.

With the help from capacity expansion and technology migration, Nanya/Inotera output growth will be 150 percent YoY. Nanya will rise 12” inch monthly output to 50K from 36K in 2011 while 60K is scheduled at 1H11.

Inotera will also pull up to full utilization at 13K by the year end from less than 10K status now. Nanay/Inotera will accelerating the 50nm migration and 42 nm in 2011.

We expect that the DRAM output growth rate for Nanya and Inotera will dominate all the DRAM makers in 2011. Nanya will be also the leading companies in terms of brand sales as well.