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DDR3 memory will capture one third of the dynamic random access memory (DRAM) market by the end of the year, confirms DRAMeXchange market research firm, which will be a tipping point for the latest type of memory. However, in the short-term future the contract price on the DDR3 will go higher due to increasing demand towards the new memory type.

According to DRAMeXchange, the June contract price did not fluctuate since some contract deals between PC OEMs and DRAM vendors are conducted either in monthly basis or quarterly basis. DRAMeXchange believes that DDR3 contract price in July will increase 5% - 10% due to the aggressive promotion of notebooks powered by consumer ultra low voltage (CULV) platform and new contract deal negotiation in July.

As for spot market, given the stable range between $1.5 and $1.7 of DDR3 1Gb chip with 50% premium compared to DDR2 1Gb chip, DDR2 1Gb chip price has dropped to $1.00 from $1.34 in May.

"From the supply side perspective, DRAM vendors adopted the "Capacity Cut" strategy through the difficult period in 2H 2008 given the frozen demand and global financial crisis. Qimonda filed bankruptcy early this year while ProMOS maintained the minimum operation. With the improved economy, DRAM vendors gradually enhance production," explained Patricia Chien, a spokesperson with DRAMeXchange.

DDR3 wafer-in portion is expected to be up to 30% in Q4 2009 from 15% in Q1 2009 while Korean and Japanese vendors demonstrate the great ambition on the DDR3 migration.

At present, Nanya and Inotera are the only capable Taiwanese vendors that can dedicate to DDR3 production. However, the DDR3 portion of Nanya and Inotera is below 10%, while the rest 90% is occupied by Korean and Japanese vendors, Samsung, Hynix and Elpida.

Since many DRAM vendors suffered considerably from the global financial crisis, some of them had to reduce capital expenses, which undermined their ability to migrate to DDR3. In general, smaller memory makers cut their spending more substantially. Nevertheless, they still invested into 70nm and 65nm process technologies. As for Korean vendors, they do aggressively conduct not only DDR3 migration but also 50nm technology adoption.

According to DRAMeXchange, it is expected that at least 70% of DDR3 chips will be produced with 50m technology. 65nm remains current mainstream technology for Japanese vendors. Although Qimonda’s 70nm technology is still adopted to produce DDR3, Micron’s 68nm and 50nm technology will be mainly applied in the second half of 2009. This technology migration will give Nanya and Inotera some credit to compete with Korean/Japanese vendors. Meanwhile, Powerchip and Rexchip are both qualified for mess production, the research firm claims.

Tags: DDR3, DRAM, Business

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