Memory Market Overview: April 2005

This month we will pay most attention to the situation in the memory chips market, the pricing and the company shares there. Also, we will certainly mention the latest achievements in the memory technology development and try to predict what the coming spring is going to bring us.

by Anna Filatova
04/07/2005 | 09:24 PM

Since spring came, the memory module manufacturers have become very active. We get the impression that all of them were in a hurry to present to the public their new “spring fashions”. Ahead of all is again OCZ Technologies, which is hardly news to any of you, I assume, as this company is known for their largest variety of memory module product lines. In March they not only updated most of their product lines having announced new models, but also introduced a completely new product line.

 

This new product line is called Titanium, which major attraction is the reliability and not the performance characteristics, like in many other solutions from OCZ. I have actually already mentioned it in our News. They claim that all memory modules manufactured under this brand name will be tested manually and the chips will be selectively sorted out on the assembly stage. Moreover, they also offer their enhanced brand name PowerSwap warranty. Of course, the performance characteristics haven’t been left out of the question, at least the first representatives of the new product family, 512MB and 1GB PC3200 and PC2-5400 memory modules will support Enhanced Latency (EL).

However, the true Enhanced Latency was introduced in the new reincarnation of PC-3200 EL Gold Edition, which has now acquired better latencies. Now this formula looks as follows: 2-2-2-5, and this is with the standard 2.6V voltage! By the way, this part of OCZ’s activity starts looking more and more attractive, because it allows increasing the system performance significantly without pumping up the working frequencies and voltages.

As for overclocking-friendly solutions, Platinum Edition is what is traditionally targeted for this market segment. In March OCZ released a PC-4800 EL Platinum Limited Edition with 2.5-4-4-10 timings and voltage raised to 3V. As you probably know, the regular PC-4800 EL Platinum Edition memory modules boast CAS 3 and not CAS 2.5.

Another memory module maker who offered overclocking-friendly solutions in March appeared TwinMOS, very unexpectedly, I should say. They announced their Speed Premium product family based on DDR433 promising that these solutions would overclock up to 466MHz. It is interesting to point out here that these memory modules are built on the same popular Winbond BH-5 chips, as the modules from OCZ. Although in this case they should cost a little less.

TwinMOS has also reminded if itself in one more market segment: So-DIMM solutions for notebooks. Keeping pace with the time, the company announced DDR2-533 notebook modules for Sonoma platform. However, that was just an announcement: they never revealed the actual release date. Adtec, by the way, stood out in a more remarkable way: they announced DDR2-533 MicroDIMM modules with up to 1GB capacity and a price of about $770. Now all they need is the support of minimum 1GB of memory in that notebook…


Adtec DDR2-533 MicroDIMM

Another field where miniature memory modules are quite demanded is the traditional server blade platforms. This is where Apacer targets its 1GB SO-DIMM DDR-266 memory modules. Of course, this modules is a Registered one. Although, Registered memory modules become less popular here nowadays: FB-DIMMs are getting closer, and the trial production of these modules on DDR2 chips has already been started on Samsung fabs. The Koreans are ready to begin mass production of these modules any minute, as soon as the chipsets supporting FB-DIMM memory are out in the market.


Apacer 1GB SO-DIMM DDR-266

TwinMOS stuck to about the same approach in March. At CeBIT the company showcased the first prototypes of their DDR2-800 modules based on Elpida chips. Everything was great, and 6.4Gbps is a nice bandwidth, but unfortunately, there are no chipsets yet supporting it in the nominal mode. So, they are going to start actually producing these modules some time in summer (especially since Elpida starts mass production of the corresponding chips only in May also). Besides, at first they will be manufacturing very limited quantities of these modules: only for extreme overclocking fans.

Nevertheless, this is a very good start from the strategic and marketing point of view: it’s best to get to know the product first, establish slightly different company image, and of course earn a little. Especially, since the memory module manufacturers do not feel very comfortable in the current market situation. For example, Kingston is rumored to have undertaken a pretty unusual move in the end of the month. It looks like the company resorted to actual price dumping having dropped the prices for their memory modules down to the level of the Taiwanese manufacturers, such as A-Data, for instance.

In fact, this is a pretty logical move, since the situation in the memory market kept aggravating pretty rapidly (here I take into account the memory chips market in the first place). The first week passed relatively calm as the market was returning back to senses after Hynix’ dumping experience in February. The prices for 256Mbit DDR400 chips have even grown up a little bit: from $2.85 to $2.9. However, this could hardly affect the general situation. The chip manufacturers hoped to get normal level of demand in the beginning of winter, but their hopes never came true, so they ended up with overloaded warehouses. The customers didn’t hurry to shop for memory chips in March also: who would do it in the traditionally “dead’ season of the year, especially, since the prices keep falling. So, it doesn’t make much sense to buy memory chips now, because this will be an unprofitable purchase (the chip vendors have even started offering “price protection” feature, but it will hardly help).

So, the next week the prices for the same memory chips dropped down to $2.72, and on the third week of March – down to $2.5. And only on the fourth week, when we were celebrating Easter, the memory chip customers made up their mind to buy some. This slowed down slightly the price crash, so that the price dropped from $2.5 to $2.43 only. Keeping in mind that the production cost of a 256Mbit DDR400 chip is about $2.7-$2.8 on average, it becomes evident that many companies are selling at a sacrifice right now.

This is a pretty abnormal situation, I should say. It is not common practice to show losses in this market, at least for a long time. And all in all, it starts to remind me of the spring 1999, when all customers were happy about dramatically low prices (the manufacturers were also suffering losses), then the manufacturers had to start closing their production facilities, and then the fall brought the strongest crisis, when the chip prices sky-rocketed by tens of percents per day. I wouldn’t forecast anything this time, but I would like to stress that the situation is far from normal anyway and should be resolved somehow.

The whole thing becomes even more intriguing due to two opposite factors. On the one hand, the testing facilities offering their services to the memory chip makers will probably have to drop their prices in the near future, supposedly by 5-10%. Although, keeping in mind the shortage of quality services like that, the memory chip makers will have hard time trying to negotiate the price… On the other hand, the price of PBGA wafers used for memory chip manufacturing is expected to start growing at about the same rate or even a little higher in summer.

In this case, it will be pretty interesting to watch Nanya, which is traditionally the most dynamic DRAM manufacturer in Taiwan. Right now they are very enthusiastic about wining 10% of the world memory chip market and regaining their fifth position in the world’s ranking tables. Therefore, the company promises to flood the market with their chips by increasing the production volumes of the Inotera enterprise established in cooperation with Infineon, as well as of their own facilities. The company was planning to start building a new fab for 300mm wafers processing in may already.

Elpida, however, is not very willing to leave its fifth position right now. Therefore, they are also planning to increase the production volumes: since last June they have been building their new 300mm fab worth 4 billion dollars. The company has already started purchasing equipment for this fab, and the first wafers should be produced in December 2005 already. Of course, they will be not that numerous at first: only about 16 thousand pieces in Q1 2006.

The remarkable thing is that the chips cut from these wafers will be packaged not in Japan, but in China and in Taiwan: the company is packaging only about 40% of its own chips today, and by the end of the year, it will probably quit doing that at all, taking into account the contacts signed this March. Well, this should definitely have its positive effect on the chips production cost, I assume.

However, why only Elpida? Do not forget that Nanya will have to withstand not only Elpida, but also its own fellow countrymen following close behind and even dashing ahead of Nanya every now and then. In 2004 Nanya’s share in the world DRAM market was about 4.5%, while PowerChip owned about 4.7% of the market at the same time. And these competitors are also not wasting their time: as we have recently found out, the equipment of PopwerChip’s and ProMOS’ 300mm fabs is being installed ahead of scheduler. Both fabs should be set into operation this summer already.

Well, this is a pretty interesting tendency, especially keeping in mind one unanswered question: what will they do with all these chips? Maybe this is the reason why we haven’t heard any news from Korea this time. Although, some news arrived from Europe, and this was very good news for Hynix, I should say. The WTO has finally made their decision about resolving the situation with the local dues that were increased up to the covering level of 34.8%. Similar measures should follow in regards to the US market, I believe.

And another piece of news from Europe can hardly be called positive. After long and exhausting legal battles, Infineon finally gave up fighting against Rambus. According to the consent decree both parties called back their claims, and Infineon will also have to pay Rambus on a quarterly basis. At least this is a not too huge sum of money they have to pay: only $5.85 million a quarter.

Rambus has been very lucky lately, actually. It looks like they are going through a renaissance. In the end of March they announced having shipped the 500-millionth RDRAM chip, and now they see their future in the XDR standard, which is becoming surprisingly more and more popular. In the very end of the month two companies announced the production of 512Mbit XDR DRAM chips: Elpida and Toshiba. The first one presented 3.2GHz chips with 6.4Gbps bandwidth, while the latter, being Rambus’ closer and more experienced XDR partner, presented 4.8GHz chip capable of reaching 9.6Gbps bandwidth. Both companies promised to start mass production of these chips this year.