However, Nanya certainly does have something to back up these high ambitions: the company has been remaining the leader of the Taiwanese market for a long time already. For instance, in Q1 2005 the leader in the Taiwanese market with the highest sales revenues appeared Inotera enterprise – a joint venture of Infineon and Nanya. So, Nanya managed to get its well deserved half of the revenue and demonstrate very attractive business results in general.
In fact, I would partially agree with Nanya’s opinion on DDR2. Of course, it is highly unlikely to reach 60% market share in Q3 (maybe it will reach 60% of the Nanya’s sales), but the tendency has every right to exist. Samsung’s demarche is also likely to push it this way. As you probably know, they dropped the price of their DDR2-533 memory modules by 20% in the beginning of April, so that it hit $52 per unit. As a result, the price of the chips used to manufacture the above mentioned memory modules also went down.
The remarkable thing is that about a week later, in the middle of April, many other manufacturers reduced the prices of their DDR2-533 512Mbit chips, too. I think that this fact can be regarded as a clear indicator that a lot of large companies in Japan, Korea and other countries managed to reach pretty high yields with the current 0.11micron production technology. As we know, 90nm process is coming in next: in the end of the month Elpida announced the beginning of pilot production of new 90nm DDR2 chips, with the mass manufacturing scheduled for Q3 2005.
Keeping in mind that they will manage to achieve acceptable production yields by the end of the year at best, and that most competitors in this market make progress at about the same pace, we can hardly hope to see some real effect from the introduction of the new 90nm production technology this year. Although end-users do not have anything to worry about: the scale will still balance in favor of the supply, rather than demand. Moreover, the manufacturers still have the whole lot of opportunities to polish off the current 110nm process even more, which should definitely affect the production cost as well. For example, today Powerchip provides the production yields of about 50-60%, which should reach 82-85% by the end of the year, according to the company.
So, the DDR2 prices should keep going down throughout the entire year. The possible price growth in Q3, which we have just mentioned, will not be dramatic and will simply serve as an additional stimulator for the growing DDr2 market share.