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).

Micron back among top 10 DRAM suppliers in Q1

EL SEGUNDO, USA: Reports of Micron Technology Inc.'s demise in the global DRAM market have been greatly exaggerated, with the company managing to return to the Top-3 rank in the first quarter, according to a preliminary estimate from iSuppli Corp.

Micron of the United States in the first quarter increased its share of global DRAM revenue to 14.6 percent, up from 13.8 percent in the fourth quarter, and up from 11.3 percent from the first quarter of 2008.

The rise back to third place represents an impressive comeback from the company’s recent low point in the first quarter of 2006, when it dropped to the fourth rank in the DRAM market. Micron in the first quarter surpassed Elpida to take the third rank.

Micron’s DRAM resurgence could upset the applecart in the DRAM market.

“Micron’s comeback poses a risk to the health of the DRAM industry and threatens the leading players in the market,” said Nam Hyung Kim, director and chief analyst, memory ICs, for iSuppli.

iSuppli Table: Preliminary Ranking of Top-10 DRAM suppliers in Q1 2009 (Ranking by Revenue in Millions of US Dollars)Source: iSuppli Corp. May 2009

“Until 2003, the company had been a solid No. 2 behind Samsung but had seen its share decline due to its effort to diversify its product line beyond DRAM and its lateness to invest in 300mm fabs. Micron now has renewed its competitive vigor, mainly due to its acquisition of a 300mm fab from Inotera in Taiwan. Micron’s resurgence could trigger a DRAM market share war — which would drive prices down and adversely impact industry profitability in the future,” he said.

Whatever the impact on the market, Micron is likely to continue its advance in the coming quarters.

“iSuppli believes that Micron inevitably will gain market share with additional fab access in the future,” Kim said. “However, Micron’s success in acquiring a bigger piece of the market will depend on how quickly the Inotera fab converts from Qimonda’s old process technology to Micron’s stacked technology. This is something that will requires additional major investments before full production is achieved.”

DRAM disaster continues in Q1
The DRAM industry continues to suffer from overproduction and excess inventories that are causing prices and revenues to drop.

Global DRAM revenue in the first quarter declined by 20.1 percent compared to the fourth quarter and by 44.1 percent from the first three months of 2008. The DRAM per-megabyte ASP in the first quarter declined by 8 percent and shipments of megabyte units dropped by 13 percent compared to the fourth quarter.

In contrast, megabyte unit shipments grew 10 percent in the first quarter of 2009 compared to the same period in 2008, indicating that more production cuts are needed to accelerate market recovery during this worldwide recession.

Cutting the losses
Micron in the first quarter managed to outperform the market and gain share by limiting its revenue decline to 15.4 percent compared to the fourth quarter. In fact, all the Top-10 DRAM makers suffered sequential declines in revenue, except for Nanya, which actually mustered a 2.7 percent increase.

However, Nanya’s growth was a result of the comparison with its underperformance in the fourth quarter. Furthermore Qimonda’s move to stop all DRAM production helped Nanya to enter the Top-5 rank.

Samsung also posted a strong performance by containing its revenue decline to 8.4 percent in the first quarter. This gave Samsung a market share of 34.3 percent in the first quarter, a record high for the South Korean electronics giant.

Taiwanese suppliers, Powerchip and ProMOS, suffered substantial sales declines. In the case of Powerchip, its sales contracted 85 percent compared to the same quarter last year.

DRAM contract prices to rise 10-15 percent MoM in May

TAIPEI, TAIWAN: Sources indicate that the biggest DRAM spot market suppliers, Powerchip and Elpida, have stopped shipping chips to the spot market, resulting in tighter supply, says DRAMeXchange. Therefore, DDR2 1Gb spot prices have stayed strong at US$1.2. Meanwhile, marketers expect to see the prices move towards US$1.5 by end of June.

According to DRAMeXchange’s survey, DRAM contract price, the “low” in May is expected to move to the range of US$9-US$10 per GB from the US$8 to US$8.5 per GB in April, up roughly 15 percent MoM. Some DRAM makers are even aggressively setting the target up to US$12 or US$13 per GB for May. The tier-one PC OEMs expect to see a mild growth, while the tier-two or tier-three PC OEMs may be forced to accept US$11-US$12 per GB price in May, DRAM makers indicated.

DRAMeXchange notes that the PC shipment growth in February, March and April reached 3.1 percent, 16.8 percent and 5.3 percent, respectively. The better than expected PC shipment helped consume PC OEMs' DRAM inventory.

As DRAM makers sharply cut back on production and control their respective inventory in hoping to push DRAM prices higher, DRAMeXchange believes the DRAM upward trend can continue through 3Q09 and the low price of the 1GB chip can reach US$12. If DRAM makers continue to maintain production cuts and inventory control, DDR2 1Gb may soon reach US$1.5.

DRAM makers being offered lifelines via bail out plans!

Browsing the Web these past days has brought me to various stories, mostly discussing the various bail out plans being provided for some leading DRAM makers.

It all started with Germany based Qimonda announcing that it has arranged a Euro 325 million financing package for the ramp up of its innovative Buried Wordline technology.

Yesterday, Hynix, the Korean DRAM maker, received a bail out of $597 million, according to reports on Fabtech. The story also reports that Powerchip Semiconductor, Taiwan's largest DRAM maker, is also seeking new funding.

Then, DigiTimes, a very good technology news Web site from Taiwan, reported yesterday that Taiwan's Ministry of Economic Affairs (MoEA) had reportedly developed an NT$200 billion (US $6.5 billion) bail out plan for Taiwan's hard-hit DRAM makers.

Sitting in India makes it a little difficult to speak with global companies based in Taiwan, Korea and Germany. I sometimes wish I could get some help from reliable sources as to what's the actual ground situation.

Having said that, it is good to see various national governments showing their deep concern about the state of the global DRAM industry and about technologies. And, let us keep all criticisms aside, as to who performed and who didn't! Here's a lesson for India to learn from, as closer home, it has a semiconductor industry really in its infancy!

Right now, the global semiconductor industry is facing a downturn and memory is the hardest hit! Hence, if any measures are being taken to somehow bring DRAM back on track, it should be welcomed.

Qimonda, Hynix, Powerchip, etc., are not small names in the global industry. Poor performance from memory players saw them dropping out of the top 20 global semiconductor players' rankings in 2008.

All the lifelines being provided to these major players now means that these companies need to pull it off, somehow, and extricate themselves from the depths they have fallen into. If they fail, they will perish! And, they all know that!!

I'd be very keen to see the responses of DRAMeXchange and iSuppli on these bail out plans.

Merry X'mas everyone, and hope you all have a great time!

PS: I have iSuppli's feedback!

Speaking on the Taiwan government's bail-out plan as well as Hynix's rescue package from banks, John Lei, Analyst, memory, iSuppli Corp., said: "In general, Hynix's package is much like a short-term relief for their near-term debt, while the Taiwan government aims at the possible consolidation of five suppliers."

"All these packages could bring more uncertainties to the maket, however, based on iSuppli's assumption and forecasts. The industry operation profit margin will hit bottom in Q4-08, but profitability of the industry will not occur until Q4-09," he added.

New camps promise exciting times ahead in memory market

The last few weeks of this month witnessed some interesting developments in DRAM. No, there are not signs of a recovery, yet. Instead, the appearance of new DRAM camps, as well as a new memory interface working group, does generate some interest.

However, first, the stats. DRAMeXchange recently reported that the Q1-08 revenues of the branded DRAM makers, impacted by continual low DRAM prices, fell by roughly 5.8 percent compared to Q4-07. Likewise, the contract prices and the spot prices fell 19 percent and 11 percent respectively.

DRAMeXchange further reported that barring Elpida and Powerchip, all other DRAM makers experienced a decline in revenues. Both Elpida and Powerchip witnessed slight increase in their market share during Q1-08.

Categorizing the DRAM industry market share by countries, Japan only increased by 0.9 percent from 13.5 percent to 14.4 percent, as Elpida's revenue increased in Q108. Taiwan's share increased by only 1.1 percent from 13.6 percent to 14.7 percent, as Powerchip gained market share. Korea sustained the same market shares -- 47.2 percent, as in Q4-07.

However, America and Germany lost share. America's share slipped from 13.6 percent to 13 percent, while Germany's share fell from 12.2 percent to 10.8 percent, respectively.

In a recent investor conference, Samsung announced it will increase its Bit Growth Rate from 70 percent to 100 percent, an indication of its desire to continue reigning as a DRAM market leader.

Now, to the really interesting developments. First, Nanya and Micron signed an agreement to create MeiYa Technology Corp., a new DRAM joint venture. One of Nanya's 200mm facility in Taiwan will be upgraded to 300mm starting this year, with the facility going online for production in 2009. Besides MeiYa, Nanya and Micron will co-develop and share future technology.

If this wasn't enough, close on the heels of the Micron-Nanya JV, Elpida Memory and Qimonda AG, signed a Memorandum of Understanding (MoU) for a technology partnership for jointly developing memory chips (DRAMs), and accelerate their roadmap to DRAM products featuring cell sizes of 4F2.

Analysts at DRAMeXchange believe that the Qimonda-Elpida alliance re-shuffles the DRAM competitive landscape. It is also a sign of Qimonda's determination to develop stacked process.

Lastly, ARM, Hynix Semiconductor Inc., LG Electronics, Samsung Electronics, Silicon Image Inc., Sony Ericsson Mobile Communications AB, and STMicroelectronics announced the formation of a working group, the Serial Port Memory Technology (SPMT), which is committed to creating an open standard for next-generation memory interface technology targeting mobile devices.

SPMT, a first-of-its-kind memory standard for DRAM, is said to enable an extended battery life, bandwidth flexibility, significantly reduced pin count, lower power demand and multiple ports by using a serial interface instead of a parallel interface commonly used in today's memory devices.

Handset vendors have joined the fray as this technology will not only extend battery life, it will allow high-performance media-rich applications as well, that are likely to be the norm on next-generation mobile phones.

Surely, these developments and the emergence of new camps promise some exciting times ahead in the memory market.