TC issues initial determination in Tessera’s DRAM ITC action

SAN JOSE, USA: Tessera Technologies Inc. announced the Administrative Law Judge (ALJ) in the International Trade Commission (ITC) action brought by Tessera against certain DRAM manufacturers issued an Initial Determination finding Tessera’s asserted patents are valid, but not infringed by the respondents. The action is Investigation No. 337-TA-630 (DRAM ITC action).

The ALJ’s decision, termed an “Initial Determination,” is subject to review by the full Commission. Within 120 days of the issued Initial Determination, the Commission can affirm, modify or reverse the ALJ’s decision in developing the ITC’s final determination.

“We intend to once again seek review of the Initial Determination by the full Commission,” said Henry R. Nothhaft, president and CEO of Tessera. “The Commission previously agreed in our Wireless ITC Action that our technology was valid and that we had proven infringement at trial. We hope that it will again reverse the ALJ’s Initial Determination. Furthermore, we have not taken into account any revenue based on the outcome of this ITC action in preparing our financial guidance. We remain focused on developing innovative technologies and are confident in the future of our business.”

The respondents in the DRAM ITC action include Acer, Inc., Centon Electronics, Inc., Elpida Memory, Inc., Kingston Technology Co., Inc., Nanya Technology Corporation, Powerchip Semiconductor Corp., ProMOS Technologies Inc., Ramaxel Technology Ltd., Smart Modular Technologies, Inc., and TwinMOS Technologies, Inc. Tessera is asserting infringement of three Tessera patents, U.S. Patent No. 5,663,106 (‘106), U.S. Patent No. 6,133,627 ('627), and U.S. Patent No. 5,679,977 (‘977) and is seeking, among other things, an exclusion order barring importation of infringing products that incorporate the patented technology.

Samsung says memory ‘dynamic duo’ critical for today’s data centers

SAN FRANCISCO, USA: Samsung Electronics, the largest producer of DRAM and solid state drives (SSDs) in the world, today announced that the ‘dynamic duo’ of server power savings: Samsung’s DDR3 memory chips and SSDs, has the potential to sharply reduce data center costs.

DDR3, which can be specified at 1.35Volts, and enterprise SSDs, which can be installed in arrays of servers as a replacement for far less-efficient hard disk drives, have the combined potential to save over 10 percent of power usage per server, and sometimes even more.

“With anywhere from dozens to thousands of servers in any given data center, the potential for substantial cost savings with DDR3 and SSDs is enormous,” said Jim Elliott, vice president, memory marketing, Samsung Semiconductor, Inc.

“Blending the exceptionally low power of today’s DRAM with performance optimized, high capacity enterprise SSDs provides data center managers with a solid alternative to slower, high-voltage DRAM and hard disk drives,” he added.

According to the Environmental Protection Agency, the need for reducing energy consumption in servers will reach critical proportions over the next three years as consumption is expected to reach 120 billion kilowatts a year by 2011. To reduce this significantly, data center managers must adopt newer technologies that provide substantial energy savings and greater performance efficiencies.

Samsung said the use of higher density, low-voltage DDR3 as a replacement for its long-running DDR2 predecessor, can save over 70 percent in reduced power consumption, through lower voltage requirements and the use of more energy-efficient 40nm class process technology.

In a data center environment, SSDs provide a compelling value when the total cost of ownership is considered, including hardware cost, maintenance, repairs and reduced electricity bills. A single SSD can realize up to 70 percent in power savings.

Samsung Enterprise SSDs can process as much as 100 times the number of IOPs (input/outputs per second) per watt as a 15K rpm 2.5-inch SAS HDD with a very low heat load on data center air conditioning. The IOPs-based performance of one SSD can equal up to 40 hard disk drives.

“The combination of Samsung’s DDR3 and SSDs in new server architectures will provide more powerful green IT solutions and help immensely in putting the brakes on unnecessary energy drain. This has already been proven by server OEMs that have adopted our 50nm class process DRAM,” Elliott added.

DDR3 and SSDs deliver more than energy-savings. DDR3 effectively doubles the performance level of its predecessor, DDR2, with speeds of up to 1333 megabits (mbps) per second. Samsung’s 100 gigabyte (GB) SSD reads data sequentially at 230 megabytes per second (MB/s) and writes it sequentially at 180 MB/s.

With module densities ranging from 2GBs to 16GBs (and soon 32GBs), Samsung’s DDR3 enables OEMs to more easily design servers that use up to 192GBs of memory per system (16GBx12), considerably more than traditional server configurations. With virtualization requiring higher density memory, Samsung’s memory solutions become all the more attractive.

In addition to virtualization, Samsung’s “dynamic duo” will benefit a wide range of other data center storage applications such as video on demand, web serving and secure online transaction processing.

Elpida’s DRAM sales soar in Q2; DRAM market up 34pc

EL SEGUNDO, USA: Japan’s Elpida Memory Inc. was the star of the global DRAM market in the second quarter, with a robust increase in its pricing causing its revenue to surge by 50 percent from the first quarter, according to iSuppli Corp.

Elpida posted the strongest performance among the Top-5 DRAM suppliers in the second quarter, with revenue rising to $745 million, up from $497 million in the first quarter. Company performance was boosted by a robust 32 percent rise in its DRAM ASP in the second quarter compared to the first.

“Elpida accomplished its strong increases in revenue and pricing by expanding its specialty DRAM sales to mobile and consumer applications,” said Nam Hyung Kim, director and chief analyst for memory ICs and storage at iSuppli. “These specialty DRAMs command higher prices than commodity parts, allowing Elpida to outperform its competitors.”

The table presents iSuppli’s top-10 DRAM supplier ranking the second quarter.

iSuppli: Top-10 DRAM Supplier Ranking the Second Quarter (Ranking by Revenue in Millions of US Dollars)Source: iSuppli, Aug. 2009

The news comes amid a strong performance for the overall DRAM market, with revenue reaching $4.5 billion in the second quarter, up 34 percent from $3.4 billion in the first quarter. This contrasts with a 19 percent decline in the first quarter compared to the fourth quarter of 2008.

“Due to a shortage in DDR3 parts and to buyers’ inventory re-stocking efforts, the per megabyte price for DRAM jumped by 18 percent in the second quarter, an unusual increase for a market that customarily sees its prices decline during each quarter,” Kim added.

This 18 percent rise was much higher than iSuppli’s previous forecast of a 2.6 percent increase.

Megabyte equivalent unit shipments of DRAM also grew by 14 percent, surpassing iSuppli’s estimate of 6.2 percent and resulting in a dramatic improvement in overall market conditions.

The other big winner during the second quarter was Taiwan’s Winbond Electronics Corp., whose revenue doubled, rising to $87.6 million, up from $44 million in the first quarter.

Tier-1 results mixed
Among the other Tier-1 suppliers, results were mixed. The Top two South Korean companies -- Samsung Electronics Co. Ltd. and Hynix Semiconductor Inc. -- captured 55.9 percent of the global market, with DRAM sales for each company increasing sequentially by more than 30 percent during the second quarter.

Micron Technology Inc. of the United States saw its share of DRAM revenue dip to 13.9 percent in the second quarter, down from 14.3 percent in the first quarter, owing to the very strong sales growth of the other Tier-1 DRAM suppliers. However, Micron’s second-quarter revenue declined by only 15.2 compared to the same period in 2008, the lowest level of decrease among the Top-10 DRAM suppliers in the second quarter.

Taiwan’s Nanya Technology Corp. also performed relatively well on the year-over-year comparison, with only a 15.4 percent decline in revenue.

“The relatively limited declines of Micron and Nanya, which recently entered a partnership, showed that the companies are seriously striving to increase their scale to become more competitive in the market,” Kim said.

DDR3 shortage continues until the end of the year
iSuppli believes that the recent shortage of DDR3 DRAM will persist through the end of this year.

Limited capital investments will continue to delay the migration to the 5x nanometer process until the first quarter of 2010. Until that time, DDR3 supply will continue to be tight in the market.

The DDR3 shortage recently has been making PC OEMs panic. A few OEMs are considering reducing their DDR3 adoption by returning back to DDR2 as most of Intel’s current chipsets still support dual modes (i.e. DDR2 and DDR3). The momentum of the price increases will definitely decelerate.

However, tight supply will persist and PC OEMs' profit margins are expected to be challenged in the second half of 2010, Kim said.

Memory update: Pricing and demand increases for 128x8 chips

USA: USA: Presenting Converge's Market Intelligence Report, August 2009.

The DRAM market continues to show signs of improvement. We are currently tracking increased demand from module manufacturers for 128x8 DDR2 chips, both in PC667 and PC800 speeds. Pricing has increased significantly over the last five months.

For example, the average price for a 128x8 DDR2 chip has risen from $0.85 in March to roughly $1.50 in the second week of August. There are mixed opinions on why the market has become so tight for these modules.

Many end users believe that DRAM manufacturers are squeezing the supply from the market in order to increase prices.

Some are claiming that their demand volume has remained steady throughout the past five months and there should be no reason for the market to heat up, while other end users are experiencing improving business conditions as we head into the second half of the year. All of this could also be leading to an increase in demand.

Either way, the market is steadily improving for both DDR2 and DDR3. The key to sustaining these improvements is to stay the course and avoid drastic spikes and dips in spot market activity. Any sign of inventory "dumping" will erase some if not all price increases in the memory market this year.

Applied Materials improves operating performance

SANTA CLARA, USA: Applied Materials Inc. reported results for its third fiscal quarter ended July 26, 2009. Net sales were $1.13 billion, and the GAAP net loss was $55 million, or $0.04 per share. The company also reported a non-GAAP net loss for the period of $2 million, or breakeven per share.

“In a difficult environment, Applied improved its operating performance and generated significant cash flow while making substantial investments in new technologies for next-generation semiconductor chips, flat panel displays and solar panels,” said Mike Splinter, chairman and CEO.

New orders for the quarter totaled $1.07 billion. Regional distribution was: Southeast Asia and China 25 percent, Taiwan 24 percent, Japan 14 percent, North America 14 percent, Europe 12 percent, and Korea 11 percent.

Within the Silicon Systems Group (SSG), new order composition was: foundry 42 percent, DRAM 25 percent, logic and other 18 percent, and flash 15 percent. Backlog for the company as of the end of the quarter was $2.95 billion, down from $3.16 billion in the previous quarter.

Yale University, SRC develop next-generation DRAM

RESEARCH TRIANGLE PARK, USA: Semiconductor Research Corp. (SRC), the world's leading university-research consortium for semiconductors and related technologies, and Yale University researchers today announced they have developed a new DRAM cell using ferroelectric layers that could significantly increase the technological and market competitiveness for DRAM technology.

According to early findings, researchers have found a way to apply ferroelectric material to a DRAM cell, which eliminates the need for a storage capacitor found in conventional DRAM. Ferroelectric DRAM (FeDRAM) is a capacitor-less DRAM cell, with a cell structure very similar to a CMOS transistor, except that the gate dielectric is ferroelectric.

Compared to the conventional DRAM cell, FeDRAM offers simpler cell structure, improved scalability, a smaller cell size, orders of magnitude longer retention time, lower power consumption and the possibility of storing multi-bits per cell. Storing many bits of information in a single DRAM cell has not been done and is found primarily only in flash memories.

“There have been numerous research groups that have worked on similar ferroelectric device structures for non-volatile memory applications, but we believe this is the first innovative FeDRAM solution to an industry-wide problem,” said Professor T.P. Ma, Raymond John Wean Professor of Electrical Engineering at Yale University.

“If we are able to show through further research that FeDRAM indeed possesses the superb properties that we are seeing now, these advancements would produce meaningful cost and performance benefits to global DRAM makers and their customers.”

Reducing costs, increasing competitiveness
According to Professor Ma, the FeDRAM structure provides many benefits. FeDRAM allows a device to be programmed and erased by a gate voltage pulse. Since charge retention is at least 1,000 times longer than that in conventional DRAM, refreshing can be much less frequent.

Its circuit architecture is similar to flash memory, helping the manufacturability of the technology. The ability to use proven and existing fabrication facilities and equipment would make an industry transition to FeDRAM much easier.

“One key advantage of FeDRAM is its ability to scale,” said Kwok Ng, Director of Device Sciences at SRC. “Existing DRAM technology is not highly scalable due to its difficulty in maintaining an acceptable storage capacitance while reducing footprint. However, we see the potential for greater scalability with FeDRAM, extending the benefits well into the future.”

Researchers now are working toward being able to demonstrate FeDRAM cells, simple building block circuits and pathways for scaling. They believe that with SRC support and collaboration with other SRC member companies, FeDRAM will be ready to transfer to the industry for production in the foreseeable future.

Global DRAM revenue rises 27.1 percent in 2Q09

TAIPEI, TAIWAN: According to DRAMeXchange, with the production cut effect in DRAM contract price, PC system vendors continue to replenish their DRAM inventory under the low pricing status and resulted in the 23 percent growth contract price in 2Q09.

Given the tight supply, spot price also hikes that DDR2 1Gb 667MHz chip spot price once reached $1.27 in May and it was anticipated to reach $1.5 by the quarter end. However, it is said that a certain DRAM vendor released the low price chip to spot market that trigger the price fallen to the rage of US$1.05~US$1.19. Average price for DDR2 1Gb 667 MHz rose 27 percent to $1.12 in 2Q09.

The 2Q09 DRAM revenue rose about 10 percent~50 percent given the 23 percent growth contract price and 27 percent growth spot price. Samsung and Elpida have outperformed the market and increase 3 percent to their market share. Compared with the overall industry revenue in 1Q09, DRAM revenue for 2Q09 rose 27.1 percent to US$4,043M in 2Q09.

Global own brand revenue ranking for DRAM vendors
According to DRAMeXchange, 2Q09 DRAM revenue increased 27.1 percent. Samsung continued its unchallenged leadership in the DRAM industry with $1,179M DRAM revenue in 2Q09 while its market share has climbed 2.8 percent to 29.2 percent given the upward pricing trend in contract price, technology migration and raise DDR3 portion.

In 2Q09, Hynix's DRAM sales rose 31.5 percent to $928M given the 20 percent average price growth, 10 percent quarterly bit growth and dropping unit cost. Currently, Hynix ranks at the 2nd place and its market share has increased 0.7 percent to 22.9 percent.

Elpida recorded the dramatically 50.1 percent sales increase and strengthened its 3rd market leading position to surpass Micron given the 27 percent ASP growth and 12 percent bit growth.

For the different accounting period (2Q for Micron is March, April and May) it applied for the accounting periods, contract price still decline 2 percent compared with last periods (Dec., Jan. and Feb.).

According to DRAMeXchange, DDR2 1Gb 667MHz contract price was merely $0.88 in March while the contract price increased to $1.16 in June that the revenue upward pattern is less than other vendors. Therefore, Micron would grab 4th place in the ranking while its market share has declined to 13.6 percent in 2Q09 from 15.2 percent in 1Q09.

As for the Taiwanese vendors, Nanya ranks at the 5th position along with $230M DRAM revenue and 34.5 percent QoQ given the upward pricing trend in both spot market and contract market, and peaking utilization rate of outsourcing partner-Inotera.

Benefited from the 27 percent boosting spot price and 42 percent utilization rate from 25 percent, PSC shows the amazing 38.1 percent revenue growth in 2Q09 and its market share has slightly increased.

Winbond announced its 2Q09 DRAM revenue at $80m with merely 8.6 percent QoQ. The market share has declined to 2 percent since growth momentum is comparably weaker than the market. ProMOS also demonstrates 20.9 percent QoQ revenue pattern with the upward pricing trend as well.

Fig. 1: 2Q09 WW DRAM revenue ranking, by own brand DRAM revenue
(Company revenue includes outsourced portion and excludes the sub-manufacturing revenue)Source: DRAMeXchange, Aug. 2009

*Qimonda did not announce any financial results in 2Q09 under the stage of bankruptcy.; Unit: Million USD

Note:
Fig. 1: For Samsung 2Q DRAM revenue , we approximately derived the resulted by deducting LSI revenue from semiconductor based on the assumption that DRAM revenue accounts for 48.3 percent in memory sectors and 2Q09 average exchange rate is $1 against KRW$1,283. We apply this estimation to other vendors by indicating 71 percent for Hynix total revenue, 49.8 percent for Micron, 89 percent for PSC, 90 percent for ProMOS, 94 percent for Nanya and 80 percent for Winbond under the following exchange rate: US$1 against NT$33.09, US$1 against JPY$97.41.

Own brand market share of global DRAM industry (By country)
The Korean vendors share rose 3.5 percent to 53.4 percent compared with 1Q09 and their leader position remained unchallenged in 2Q09.

Shares from the Taiwanese vendors slightly rose to 13.8 percent in 2Q09 from 13.5 percent in 1Q09. The rest of market share is occupied by Japanese vendors(18.9 percent) and American vendors (13.9 percent), as per Fig. 2.

Fig. 2 The market share of own brand DRAM revenue, by countrySource: DRAMeXchange, Aug. 2009

Elpida enters graphics memory business; acquires Qimonda's technology licenses

TOKYO, JAPAN: Elpida Memory Inc., a leading global DRAM supplier, has reached an agreement with Germany-based Qimonda AG, which is now in insolvency proceedings, to acquire Qimonda technology licenses and a portion of the design assets related to Graphics Double Data Rate (GDDR), a memory architecture that has a high-speed data interface for graphic processing applications.

Based on the licenses and assets acquired from Qimonda, Elpida will now join the graphics DRAM business and become a memory solutions company with an expanded range of products and services.

Elpida plans to quickly ramp up a full-fledged GDDR business. GDDR technology development will continue at Elpida's recently built Munich Design Center (Elpida Memory Europe GmbH, Munich branch), where nearly 50 engineers and other former Qimonda employees involved in GDDR development work will take up new posts. Shipments of 1-Gigabit GDDR3 and 1-Gigabit GDDR5 products are expected to begin in the first half of CY 2010.

The production of both products is considered to be outsourced to Winbond Electronics Corporation, a Taiwanese company that has experience with Qimonda's process technology.

Also, following additional development work by a highly qualified team of engineers working jointly in Germany and Japan, Elpida plans to begin mass production of 2-Gigabit GDDR5 at its Hiroshima Plant starting in the second half of CY 2010.

Because of its high-speed data transfer capability, GDDR is well-suited to graphics processing, which makes it a popular engineering solution among makers of advanced game consoles. GDDR technology is also well-established as a graphics solution among high-end desktop and notebook PCs.

Only a limited number of global DRAM vendors are capable of supplying products across multiple business areas, starting with commodity DRAMs and extending to graphics GDDR DRAMs, high-speed XDR™ DRAMs and Mobile RAM™ for mobile equipment.

By becoming one of the few full-range suppliers, Elpida expects to now play an increasingly important role in the DRAM market.

"Graphics systems now need graphics buffer memory with a data transfer rate of more than 5-Gigabit/sec given the rapidly growing popularity of high-definition format graphics data, 3D graphics and various display formats," said Takao Adachi, Elpida's Chief Technology Officer.

"In response to this need we will shortly begin commercial production of GDDR5, for which an even faster data transfer rate of 8-Gigabit/sec may be feasible in the near future. To achieve such high speeds advanced technologies for I/O signal transmission as well as internal high speed circuits are crucial. The important GDDR technologies we have acquired can now contribute not only to Elpida's graphics memory development but also to the improvement of our overall DRAM design technologies."

Elpida's products have received superior evaluations from customers in both the mobile DRAM market, which places emphasis on low power consumption, and the server DRAM market, which values a high degree of memory reliability.

With its entry into graphics DRAMs, a market that places a premium on extremely fast speeds, Elpida will now be involved in all areas of the DRAM market. This will enable the company to expand its customer base, improve customer support and establish a considerably stronger business foundation.

Overall chip and electronic component prices to rise in Q3; decline to resume in Q4

EL SEGUNDO, USA: The average global pricing for commodity electronic components is likely to rise by 2.3 percent in the third quarter compared to the second quarter due to shortages and resulting price hikes for memory chips, according to iSuppli Corp.

Following declines of 8.4 percent in the fourth quarter of 2008, 9.2 percent in the first quarter 2009 and 5 percent in the second quarter of 2009, overall prices are expected to undergo a short-term rise in the third quarter.

Most components actually are expected to experience price declines in the third quarter, but the average is being skewed by DRAM. Furthermore, prices will revert to declines in the fourth quarter, with a moderate 0.2 percent decrease.

“Overall component pricing is being heavily impacted by price hikes for DRAM, spurred by a shortage of DDR3 parts,” said Eric Pratt, vice president, pricing and competitive analysis, at iSuppli. “Overall DRAM pricing is expected to rise by 10.2 percent in the third quarter.”

With DRAM accounting for 9.1 percent of global semiconductor revenue in 2008, the price increase in this area is having an inordinate impact on overall component costs.

Other areas seeing price increases include analog integrated circuits (ICs), discretes and filters.

The figure presents the results of iSuppli’s Procurement Pricing Index (PPI), which encompasses an overall average of global commodity component pricing.

iSuppli Procurement Pricing Index (PPI) Average Sequential Pricing Trends for Commodity Electronic Components (Percentage Change in Pricing in US Dollars)Source: iSuppli, August 2009

Pricing will decrease moderately during the third quarter for most major memory segments. NAND-type flash will experience a 0.3 percent decline. NOR pricing will decrease by 1.1 percent. EEPROMs pricing will remain flat.

Declines also are expected for standard logic ICs, crystals, oscillators, connectors, resistors and magnetics. An overall decline is expected for capacitors.

Despite these decreases, the overall rise in the PPI indicates pricing conditions are changing for commodity components.

“iSuppli previously expected price decreases would be of a greater magnitude in the third quarter as commodity component suppliers cut tags to capitalize on rising demand,” Pratt said.

“However, semiconductor suppliers have scaled back their capacity significantly during the downturn. This means supplies are somewhat tighter than expected, preventing prices from declining as much as expected.”

Hynix appoints new Chief Marketing Officer

SEOUL, SOUTH KOREA: Hynix Semiconductor Inc. announced the appointment of Ji Bum Kim as the new Chief Marketing Officer. J.B. Kim replaces Dae Su Kim, who has currently resigned.

In his new position, J.B. Kim will be responsible for all Sales and Marketing functions at Hynix, covering DRAM, NAND Flash, and CMOS Image Sensors.

J.B. Kim has spent 25 years in the semiconductor industry holding management positions in both engineering and marketing. His most recent position was Senior VP of Technical Marketing and Product Planning at Hynix where he has worked since 1999. Prior to this, Kim was VP of Technical Marketing at Hynix Semiconductor America, a position he held for four years.

He started his career at LG Semicon, gaining rich experience in semiconductor memory design, process and device engineering, for a period spanning 16 years. LG Semicon merged with Hyundai Electronics in 1999, resulting in the creation of Hynix.

“We are pleased to appoint J.B. Kim as the new CMO. Kim will bring valuable engineering and marketing experience to Hynix with his knowledge of the emerging technologies and applications. He will greatly help Hynix develop new products, enter new markets and expand our customer base,” said Dr Jong Kap Kim, CEO of Hynix.

TMC files business plans for restructuring Taiwan DRAM industry

I generally expect to hear such developments happening in Taiwan, simply because of my great admiration for this country!

According to a published report from the Taiwan News, Taiwan Memory Co. (TMC) has filed its business plan for restructuring the country's DRAM industry.

TMC is said to have officially filed its business plan with the Ministry of Economic Affairs (MOEA), Taiwan. TMC plans to develop its own technologies in collaboration with Japan-based Elpida Memory Inc. It is so far the only company that has filed its business plan to bid for funding.

For those who came in late, Taiwan's DRAM industry has been having problems for some time now due to an oversupply of local makers, who are relatively small compared to South Korean counterparts. The Taiwan government proposed consolidating all of the DRAM makers into one company -- TMC.

iSuppli upgrades DRAM market rating to positive

EL SEGUNDO: Amid a shortage of DDR3 memory and a resulting rise in pricing, iSuppli Corp. has upgraded its rating of near-term conditions for DRAM suppliers to positive.

iSuppli had maintained its negative rating since September 2008 until it upgraded the condition to neutral two weeks ago.

“The improvement in circumstances is a welcome relief to a DRAM market that has been stuck in a state of oversupply for nearly three years,” said Nam Hyung Kim, chief analyst for iSuppli.

“The oversupply has been a disaster for the global DRAM industry, with revenue dropping to $23.6 billion in 2008, down from $34 billion in 2006,” Kim said. During this period, the profitability of DRAM suppliers evaporated completely, and the combined operating loss for the entire DRAM industry amounted to $15 billion during the last three years.

Kim added: “With rising demand and limited supply for DDR3, the global DRAM industry is set for a sustainable recovery that will extend into the fourth quarter and pave the way for a robust annual increase in 2010.”

DRAM revenue plunged by 19.5 percent in the first quarter compared to the fourth quarter of 2008. However, with the rise in DRAM pricing, revenue increased by 37.5 percent in the second quarter compared to the first. Revenue is set to continue to rise on a sequential basis by more than 20 percent each in the third and fourth quarters.

The figure presents iSuppli’s worldwide quarterly revenue growth forecast for DRAM.Source: iSuppli, July 2009

Kim this month visited Asia where DRAM suppliers confirmed the DDR3 shortage. The suppliers reported PC OEMs are making a rapid shift from DDR2 DRAM, which has been the industry standard for nearly three years, to DDR3 because of its high performance and low power usage.

However, suppliers have not yet ramped up production of DDR3 enough to meet this new demand. DDR3 captured only 8.4 percent of total bit shipment in the first quarter of this year and is expected to reach 15 percent of total bit shipment in the second quarter, based on iSuppli’s preliminary data.

iSuppli predicts the DDR3 shortage will persist during the third quarter because suppliers won’t be able to meet current demand. While the limited investment of DRAM suppliers is slowing their 50nm migration—a process necessary to ramp up DDR3 production quickly—the DDR3 shortage will cause supplies of DDR2 to tighten as Tier-One suppliers continue to convert production from DDR2 to DDR3.

Nevertheless, if DDR2 prices rise, suppliers in Taiwan are likely to increase their utilization rates, limiting price increases. Thus, depending on Taiwanese suppliers, a recovery in DDR2 prices could be limited, widening the price gap between DDR2 and DDR3.

The price crossover between DDR2 and DDR3 is expected to arrive near the end of the year or in early 2010 when DDR3 volume rises to be equal with DDR2’s.

While the DDR3 shortage and the improvement in market conditions are positive developments for suppliers, they represent bad news for PC OEMs and other DRAM buyers.

“Prices are rising in the third quarter, a time when DRAM buyers typically begin to make purchases for the holiday season,” Kim noted. “Adding to the current tight supply for notebook LCD panels, the increase in DRAM prices will result in lower profitability for the PC makers in the second half of the year.”

Samsung begins mass producing 2Gb DDR3 using 40nm class technology

SEOUL, SOUTH KOREA: Samsung Electronics Co. Ltd. has begun mass producing the industry’s first two gigabit (Gb) DDR3 devices using 40nm class process technology.

“We see market adoption to DDR3 picking up steam and are accommodating that with early entry of 2Gb DDR3 using the most efficient DRAM manufacturing technology available today,” said Jim Elliott, Vice President, Memory Marketing, Samsung Semiconductor Inc. “This will set the pace for a new standard in premium, eco-friendly DRAM solutions offering the most advanced, low power RDIMM for servers anywhere.”

Samsung’s seven-month window between new process technology development and mass production of the new DDR3 (Jan. to Jul. ‘09) will allow OEMs to optimize their next-generation systems more quickly.

In addition, moving to a 40nm production process will provide around a 60 percent increase in production productivity over use of a 50 nm process.

Besides 16GB, 8GB and 4GB RDIMMs for servers, Samsung will produce UDIMMs (unregistered in-line memory modules) for workstations or desktop PCs or SODIMMs (small outline dual in-line memory modules) for notebook PCs of up to 4GBs, using the new chip.

The monolithic 2Gb chips are energy-efficient solutions for high-density, high-performance memory applications. Each supports a data rate of up to 1.6 gigabits per second (Gbps) at 1.35 volts, up to twice as fast as an 800Mbps 1Gb-based dual-die package.

According to market research firm iSuppli, 2 Gb DDR3 is expected to account for 82 percent of the total DDR3 DRAM market in units sold by 2012, and become the mainstream DDR3 DRAM product by 2010.

Global semicon mid-year review: Chip market revival or blip on stats radar screen?

A recent report from Future Horizons suggests an 18 percent growth for the chip market in Q2-2009! So, is this a sign of the chip market recovery or a mere blip on the statistics radar screen?

It is both, said, Malcolm Penn, chairman, founder and CEO of Future Horizons, and counselled that: "The fourth quarter market collapse was far too steep -- a severe over-reaction to last year's gross financial uncertainty -- culminating with the Lehman Brothers collapse in September. The first quarter saw this stabilise with the second quarter restocking, but there are other positive factors also in play."

Examining a bit further, here's what he further revealed. One, the memory market is seeing some signs of slow recovery. He said, "This has already started DDR3 driven!" Likewise, companies are also in the process of revising their forecasts. The reason, Penn contended, being, "The maths has changed dramatically since Jan 2009!"

According to him, factors now leading to conditions looking up in H2 2009, include the normal seasonal demand -- from a tight inventory base -- and tightening capacity. There is also a clear indication of the correction phase to rebalance over-depleted inventories having started. "This is what's driving Q2's high unit, and therefore, sales growth," he contended.

Firms advised to stop seeing and waiting!
This isn't all! Penn further counselled firms who are still in a wait-and-see mode to 'stop seeing and waiting'! Next, fabs are also looking to maximize their returns. For one, they have stopped over-investing.

Do we have enough stats from others to back up what's been happening in the global semiconductor industry? Perhaps, yes!

IC Insights stands out
First, look at IC Insights! It has stood out by pointing out in early July that H2-09 is likely to usher in strong seasonal strength for electronic system sales, a period of IC inventory replenishment, which began in 2Q09, and positive worldwide GDP growth.

IC Insights has predicted global IC market to grow +18 percent; IC foundry sales to grow +43 percent; and semiconductor capital spending to grow +28 percent in H2-09.

DDR3 driving memory recovery? Flat NAND?
Elsewhere, Converge Market Insights said that according to major DRAM manufacturers, DDR3 demand has been on the rise over the last two months and supply is limited.

This is quite in line with Future Horizons contention that there is a DDR3 driven memory recovery, albeit slow. It would be interesting to see how Q3-09 plays out.

As for NAND, according to DRAMeXchange, the NAND market may continue to show the tug-of-war status in July due to dissimilar positive and negative market factors perceived and expected by both sides. As a result, NAND Flash contract prices are likely to somewhat soften or stay flat in the short term.

Semicon equipment market to decline 52 percent in 2009!
According to SEMI, it projects 2009 semiconductor equipment sales to reach $14.14 billion as per the mid-year edition of the SEMI Capital Equipment Forecast, released by SEMI at the annual SEMICON West exposition.

The forecast indicates that, following a 31 percent market decline in 2008, the equipment market will decline another 52 percent in 2009, but will experience a rebound with annual growth of about 47 percent in 2010.

EDA cause for concern
The EDA industry still remains a cause for concern. The EDA Consortium's Market Statistics Service (MSS) announced that the EDA industry revenue for Q1 2009 declined 10.7 percent to $1,192.1 million, compared to $1,334.2 million in Q1 2008, driven primarily by an accounting shift at one major EDA company. The four-quarter moving average declined 11.3 percent.

If you look at the last five quarters, the EDA industry has really been having it rough. Here are the numbers over the last five quarters, as per the Consortium:

* The EDA industry revenue for Q1 2008 declined 1.2 percent to $1,350.7 million compared to $1,366.8 million in Q1 2007.
* The industry revenue for Q2 2008 declined 3.7 percent to $1,357.4 million compared to $1,408.8 million in Q2 2007.
* The industry revenue for Q3 2008 declined 10.9 percent to $1,258.6 million compared to $1,412.1 million in Q3 2007.
* The industry revenue for Q4 2008 declined 17.7 percent to $1,318.7 million, compared to $1,602.7 million in Q4 2007.

Therefore, at the end of the day, what do you have? For now, the early recovery signs are more of a blip on the stats radar screen and there's still some way to go and work to be done before the global semiconductor industry can clearly proclaim full recovery!

Before I close, a word about the Indian semiconductor industry. Perhaps, it needs to start moving a bit faster and quicker than it is doing presently. Borrowing a line from Malcolm Penn, the Indian semiconductor industry surely needs to "stop waiting and watching."

I will be in conversation next with iSuppli on the chip and electronics industry forecasts. Keep watching this space, friends.

Memory update: Demand for DDR3 modules remains strong, with supplies limited

USA: As per Converge Market Insights, according to the major DRAM manufacturers, DDR3 demand has been on the rise over the last two months and supply is limited.

Sources claim that all DDR3 server DIMMs (dual in-line memory modules) are going directly to the Tier 1 OEMs as quickly as they can be manufactured, with lead times being quoted as far out as the end of October.

This may not appear like a long time, but given the state of the memory market for the past two years, any talk of a lead time is big news. The lack of supply in the spot market confirms that parts are becoming scarce.

While the DDR2 market remains flat, the DDR3 market is showing signs of life. Pricing is up about 15 percent to 20 percent over the last four weeks, and while there was no change in contract for DDR2, DDR3 pricing was up about 5 percent.

Converge anticipates that the DDR3 market will continue to show activity as we head into the busier build season. The notebook and desktop modules should also see a spike in demand in the coming months. Look for supply issues to occur with UDIMMs (unbuffered DIMMs) as well.

IC Insights: 2Q09/1Q09 worldwide IC market jumps 16pc

USA: IC Insights' soon-to-be-released Mid-Year Update to The McClean Report describes how, after the worst two quarters in the history of the IC industry (4Q08 and 1Q09), 2Q09 rebounded (+16 percent) and signaled that the "healing" process is underway.

In the past 25 years, only the 18 percent quarterly IC market increases in 2Q84 and 2Q06 and the 17% surge in 4Q99 were better than the 2Q09 results. In order to fully appreciate the magnitude of the IC market rebound, consider the following 2Q09/1Q09 results:

* The DRAM market grew over 30 percent;
* The DRAM average selling price (ASP) was up 12 percent;
* Analog IC unit volume shipments increased over 30 percent;
* Microcontroller unit volume shipments increased over 25 percent;
* DSP unit volume shipments increased over 40 percent;
* The display driver market was up 25 percent;
* Total worldwide IC unit shipments were up over 20 percent; and
* The total worldwide IC market was up 16 percent!

IC Insights is the first industry forecaster to recognize and publicize this important quarterly data. Don't be misled by the "doom and gloom" annual forecasts. Since 4Q08, IC Insights has encouraged its clients to think quarterly about 2009. As the statistics above show, this has proven to be the most relevant and useful approach to understanding the current market dynamics.

Although the IC inventory replenishment surge in 2Q09 is expected to take away some of the momentum of 3Q09, the second half of the year still looks strong. IC Insights is advising its clients to not be caught looking backwards! Now that the worst is over, this is the time to prepare for the growth that lies ahead.

1HJuly mainstream MLC NAND Flash contract price slightly drops 1-5pc

TAIPEI, TAIWAN: End-customer’s purchase willingness in early July is cautious since July is traditionally regarded as the slow season for NAND Flash main products such as memory card and UFD.

Inventory level for some card makers is still above one month. NAND Flash vendors slightly lower mainstream MLC NAND Flash contract price to enhance the purchase volume. Therefore, 1HJuly contract price of mainstream MLC NAND Flash slightly decreased 1-5 percent, says DRAMeXchange.

The 16Gb MLC average contract price has dropped 7 percent to $4 in 1HJuly from $4.3 in May, while 32Gb MLC average contract price has decreased 12 percent to $6.64 in 1HJuly from $7.56 during the same period.

The 32Gb MLC contract price showed the bigger downward pricing trend since most vendors already migrated to more advanced process technologies to produce high-density products. Therefore, price cut in promotion for 32Gb MLC was larger than 16Gb MLC over the past two months, according to DRAMeXchange.

Benefited from hot sales of iPhone 3GS and the new smartphone models launched, NAND Flash suppliers eagerly seek to increase the shipment portion of electronic system maker customers in their product mix to ease the slow season effects by memory card and UFD to improve profitability and stabilize market price.

On the other hand, end-customers urge suppliers to further offer some price discount to help them stimulate the market demand in light of the slow season effect, higher inventory level at hand and cost-down efforts of suppliers’ process technology upgrade.

Buyers and suppliers have different opinions toward the short-term market view and pricing trend and inventory replenishment for year-end hot reason is expected to warm up in August.

The NAND market may continue to show the tug-of-war status in July due to dissimilar positive & negative market factors perceived and expected by both sides. Therefore, the NAND Flash contract price is likely to somewhat soften or stay flat in the short term.Source: DRAMeXchange

DDR3 July contract price likely to rise 5~10 percent

TAIPEI, TAIWAN: The June contract price did not fluctuate since some contract deals between PC OEMs and DRAM vendors are conducted either in monthly basis or quarterly basis. DRAMeXchange believes that DDR3 contract price in July will increase 5 percent~10 percent due to the aggressive CULV promotion and new contract deal negotiation in July.

As for spot market, given the stable range between $1.5~$1.7 of DDR3 1Gb chip with 50 percent premium compared to DDR2 1Gb chip, DDR2 1Gb chip price has dropped to $1 from $1.34 in May, says DRAMeXchange.

From the supply side perspective, DRAM vendors adopted the “Capacity Cut” strategy through the difficult period in 2H’08 given the frozen demand and global financial crisis. Qimonda was filed bankruptcy early this year, while ProMOS maintained the minimum operation.

With the improved economy, DRAM vendors gradually enhance production. DDR3 wafer-in portion is expected to be up to 30 percent in Q4’09 from 15 percent in Q1’09, while Korean and Japanese vendors demonstrate the great ambition on the DDR3 migration.

Nanya and Inotera are the only capable Taiwanese vendors that can dedicate to DDR3 production. However, the DDR3 portion of Nanya and Inotera is below 10 percent, while the remaining 90 percent is occupied by Korean and Japanese vendors (see Fig. 1).

DRAM vendors were suffering from the big financial trough in the downturn economy crisis that this circumstance resulted in the obvious CAPEX gap especially in DDR3 migration. This situation is way different from what DRAM vendors devoted CAPEX in 70nm and 65nm technology. As for Korean vendors, they do aggressively conduct not only DDR3 migration, but 50nm technology adoption as well.

It is expected that at least 70 percent DDR3 chips will be produced with 50m technology. 65nm remains current mainstream technology for Japanese vendors that they do contend competitiveness if the total chip amount can be increased via “Die Shrink” process.

Although Qimonda’s 70nm technology is still adopted to produce DDR3, Micron’s 68nm and 50nm technology will be mainly applied in 2H’09. This technology migration will give Nanya and Inotera some credit to compete with Korean/Japanese vendors. Meanwhile, Powerchip and Rexchip are both qualified for mess production, according to DRAMeXchange (see Fig. 2).

Elpida to get funds from government, Taiwan Memory

This is a very important news, courtesy, MarketWatch!

By Lisa Twaronite, MarketWatch
TOKYO (MarketWatch): Elpida Memory Inc. will receive 50 billion yen ($521 million), the government said Tuesday, much of it as part of Japan's new recapitalization program for struggling non-financial companies.

Japan's Ministry of Economy, Trade and Industry said Elpida will get 30 billion yen from the Development Bank of Japan by the end of August in exchange for preferred shares.

The infusion is part of a new program is aimed at supporting companies whose failure the government fears could have a broader economic impact.

"Elpida faces a very tough environment," Economy, Trade and Industry Minister Toshihiro Nikai was quoted as saying in several reports from the region. "DRAMs are widely used by major industries in our country, and securing the stable supply of them will benefit people's lives, as well as economic and industrial activities."

Taiwan Memory Co., a chipmaker set up by the island's government, plans to invest an additional 20 billion yen by the end of this fiscal year ending in March 2010, the ministry also said.

Elpida Memory Inc. President Yukio Sakamoto reportedly told a news conference Tuesday that the fund injection under the government's new aid program was the best option available for the chip maker to secure funding and remain competitive.

Last month, Japan's only maker of dynamic random access memory chips posted a group net loss of 178.8 billion yen for the fiscal year which ended in March, deeper than its 23.5 billion yen loss for fiscal 2007.

Pioneer, NEC next?
Other Japanese firms are expected to follow Elpida's move to seek funds.

Pioneer Corp., which anticipates a sixth consecutive year of losses this fiscal year, is now making preparations to apply for a public fund infusion, Japanese business daily Nikkei reported Tuesday.

NEC Electronics Corp. and Renesas Technology Corp. are also expected to consider taking action if their planned merger next April goes through as expected, the report said.

In Tokyo, Elpida shares closed up 1.4 percent, and NEC Electronics gained 4.2 percent. But Pioneer shed 1 percent.

The benchmark Nikkei 225 Average rose 1.8 percent.

Lisa Twaronite reports for MarketWatch from Tokyo.

Samsung's first 32 Gigabyte DDR3 memory module for low-power servers

NEW YORK, USA: Samsung Electronics Co. Ltd. announced today that it has developed the world’s first 32 Gigabyte (GB) DDR3 module -– for use in server systems.

The new module operates at 1.35-volts, in support of the global trend to cut power usage in mass storage computing environments.

“Compared to the 8GB memory modules used in today’s servers, our new module packs an eco-sensitive wallop with four times the density at significantly reduced power levels and no increase in the overall footprint,” said Jim Elliott, vice president, memory marketing, Samsung Semiconductor, Inc. “For data centers, it’s a powerhouse in energy efficiency and performance,” he added.

Based on Samsung’s 50nm-class 4 Gigabit (Gb) DDR3, the 1.35V DDR3 DRAM improves throughput by 20 percent over a 1.5V DDR3. Its lower power consumption levels are in line with the pressing concern for more energy-efficient “green” systems and components.

The development of low-power 4Gb DDR3 will be viewed as critical in reducing data center costs, improving server time management and increasing overall operational efficiency at higher densities.

For the new generation of green servers, the 4Gb DDR3’s high density combined with its lower level of power consumption will not only reduce electricity bills, but also allow for a cutback on installment fees, maintenance fees and repair fees involving power suppliers and heat-emitting equipment.

The new 32GB registered dual inline memory module (RDIMM) consists of 72 4Gb DDR3 chip dies produced using Samsung’s 50-nanometer class DRAM production technology. A row of nine quad-die package (QDP) 16Gb DDR3s are mounted on each side of the printed circuit board for a collective 32GB, highly compact configuration.

According to IDC, the worldwide DDR3 DRAM market will account for 29 percent of the total DRAM market in 2009 and 75 percent in 2011. In addition, IDC estimates that 2Gb-or-higher DDR3 DRAM will make up three percent of the total DRAM market in 2009 and 33 percent in 2011 (units in bits).