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In the Merry Month of May...

This May was not so merry as used to be. The SARS epidemic negated any demand growth. It was especially tangible in the markets of East and Southeast Asia, worst of all – in China, of course. The launch of new Intel chipsets supporting high-speed DDR modules and increase in supply of these modules did little to improve the situation. However, it had all started before May, but the May holidays in China took a workweek away and aggravated the picture.

The demand for PC memory in the USA was a little better after the war phase of the Iraq campaign was over. Still, it was not enough to compensate for the recession in China and the start of the dead summer season. The introduction of protective duties against Hynix is not yet perceptible in Europe or the USA: resellers had prepared for that and accumulated large reserves in advance. Chips from Hynix haven’t yet risen in price in these regions.

Overall, there was no reason for the prices to go up. That’s why they headed down, although slowly: 256Mbit DDR chips cost below $4 in the end of May. I wonder if any memory manufacturer could have thought of such a number somewhere at the beginning of this year…

Nevertheless, by the end of the month, the situation seemed to be changing for the opposite: SARS was practically taken under control, and mainboards on i865/i875 chipsets reached the market. They raised the demand for the most expensive mainstream memory type, 400MHz PC3200. The manufacturers reacted with increased shipment volumes to push the price further down and provoke an even higher demand. At least, the manufacturers hope for such a feedback.

However, the prices in the open market are rather confusing nowadays. Chip manufacturers are trying to invite contract clients, paying less attention to the open market than before. The transitions to new production technologies underway, we have low supply against low demand. Such picture just cannot be adequate.

The perspective is quite clear, though: on the one hand, we enter summer with all its vacations, and memory makers increase their production facilities; on the other hand, the demand is becoming normal again in the USA and China, and dual-channel DDR400 configurations for the new chipsets from Intel, VIA, SiS and NVIDIA are getting more and more popular. All this should balance each other. We won’t see any dramatic events soon, besides the ongoing transition to DDR400, but this trend can hardly be called dramatic.

High Life

The high life of the PC memory industry, on the contrary, is full of rumors and changes. For example, it’s not quite clear what will become of Mosel Vitelic. The company is rumored to be quitting DRAM business altogether to concentrate on flash memory only. If this is really the case, we can make a guess at who’s going to be the buyer: 2% of the world memory market Mosel Vitelic held in the last year would help the facilities-lacking Elpida to regain the fifth place in the world rating list.

Elpida’s current No.1 partner, PowerChip, unlike Mosel Vitelic, is going for an upgrade: it will increase the amount of products sold under its brand. Sources say PowerChip will sell up to 40% of all its memory chips under its name in the second half of the year. Elpida shouldn’t worry, though. It will have its share as PowerChip is constantly increasing its own production facilities. From the third quarter on, all 300mm wafers produced by the company will be made with 0.13micron technology, which is about 4500 thousand wafers or 4 million chips every month.

 
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