The president of Inotera Memories recently said the company would mass produce DDR2 SDRAM using 90nm process technology in the third quarter of this year. The move may have impact on the company’s price policy for DDR2 memory, as using thinner manufacturing process usually drives production costs down.

Inotera, a joint-venture between Nanya Technology Corporation and Infineon Technologies AG, will produce 512Mb DDR2 DRAMs using 90nm process technology, according to a report from DigiTimes citing the company’s executive. Other specifications of the chips, such as speed-bins, are unclear. It is indicated that Inotera will be the first DRAM supplier for Infineon Technologies to volume produce DDR2 chips using 90nm process technology.

Currently Inotera makes DDR memory using 90nm with deep trench capacitor process technology. The company’s 512Mb chips produced using the firm’s most advanced fabrication process are rated to work at 266MHz, 333MHz and 400MHz with up to CL2 latency.

Elpida recently estimated that transitioning to 90nm deep trench capacitor process technology from 100nm process technology gives 40% increase in the number of memory ICs per 300mm wafer. This means that memory manufacturers can slash DDR2 pricing eventually while sustaining relatively high gross margins.

The Board of Inotera has agreed to start the construction of the shell of a second fab for 300mm DRAM production next to the existing manufacturing facility in Taoyuan County, with groundbreaking in May 2005 and construction completion by the end of 2006. The ramp-up will depend on future market conditions. The shell construction and the land procurement are expected to be funded by the company through its own means without the need for additional equity or financial guarantees from the parent companies.

The company plans to have a quarterly processing capacity of 160 thousand 200mm equivalent wafers at its fabs by year-end, up from about 80 thousand now, with total output this year increasing more than five-fold over the 82 million chips produced last year.