By the way, do you think that the last year was a year of tremendous price drops and on the whole, just an unlucky year for DRAM makers? You are quite wrong if you do. Well, if Micron had paid proper attention to 0.13micron process and followed its habit of dumping, the prices would have been even lower! We mean that Micron did pay much attention to 0.11micron process, so beware: the company is going to have a good prime cost to fight with the competitors to the end. Plus Micron has carried out company restructuring as well as its competitors, which will allow them to sell chips at even lower price than usual.

Well, the memory market players will certainly need all their reserves this year. We may blame either Infineon or Mosel Vitelic, it is up to your taste. They quarreled apart in the end of 2002 over their joint venture aka ProMOS. So, what do we have now? And we have a company that hasn’t got any big clients onboard, but has started throwing its chips into the open market. The market reacted to this by a considerable price reduction in January-February. Is that all?

No, this is only the beginning. As the quarrel with Infineon was rather a unexpected thing, Mosel Vitelic had no production facilities at hand to package DRAM chips. And they needed enough facilities to digest about 60 thousand 200mm wafers from ProMOS at that time. Mosel Vitelic has got them now. And while the company’s output into the open market was only about 5-6 million chips in January, this number is going to reach 10 million in March! ProMOS is also expected to increase the production volumes of 300mm wafers from 7500 to 9000, which is about 3500 wafers in 200mm equivalent. There is one more thing: Taiwanese court confirmed that ProMOS has the right for 0.11micron technology from Infineon, although the latter is threatening with all possible and impossible measures. But Infineon has had no luck in lawsuits against ProMOS lately. The overall picture is impressive, isn’t it?

There is one more aspect in the situation. What was the main cause for the price growth last summer and fall? Firstly, the manufacturers were all going over to new production technologies, which required a rather long production lines halt. Secondly, there appeared first Intel chipsets with DDR SDRAM support and they provoked a jump in demand for this memory type. As the memory makers didn’t meet the demand and, moreover, hadn’t taken up DDR seriously yet, we experienced some shortages with all the evident consequences.

Does it resemble what we have now? Yes and no. On the one hand, new Intel chipsets supporting PC3200 are coming out. On the other hand, all the big sharks, like Samsung, have been producing it for a long time now. There are no causes and there hardly will be any to halt the production lines.

All these things mean we are up to a definite price reduction, at least until the coming summer.

Conclusion

What about the next summer? Well, there may be some changes then. As usual, most customers are now waiting for the price to reach the bottom and then start buying up. We haven’t reached the bottom yet, but it may be reached somewhere about this summer, when 256Mbit DDR will cost about $2-$2.5 and some manufacturers may be switching over to flash and other products and hence will leave the market. So, at that time mass purchases will start taking place with all the resulting consequences. Theoretically, it’s quite possible we see prices grow some time in summer.

There can be some smaller and really short-lasting price bursts in the next few months, though. We can recall the last November when the memory price soared by a third, but then quickly returned to the same point. We are still not quite certain what it was all about, because no demand growth was detected. But the market stood strong and we may only wish it to resist hysteria in the future. There are no evident causes for the price to grow; it will be going down until summer.