Tuesday, April 17, 2001
The Changing Landscape
The traditional landscape of the memory market has shifted from being PC centric to cover broader areas. The new generation of telecom switches and routers were expected to take up a large number of memories. Net appliance will be a major consumer of memory. Memory hungry servers will also take up a lot of the new memory produced. PDA and mobile phones will not be too far behind. They will start to use a variety of low-power DRAM in the micro DIMM format.
Intel Drives to RDRAM
Intel promised to replace the P3 with the new P4 processor. However, the P4 processor can only work with Rambus Memories which is still many times the price of the regular SDRAM. Presently, Intel has a promotional program to sell the P4 processor together with the RDRAM as a package at a reduced price to make it attractive. As a result, several memory manufacturers have committed for more RDRAM productions.
Rambus’ Patent Issue to be Decided in Court
For the time being, Rambus’ strategy is to collect license fee on all SDRAM and DDR systems to offset the difference in RDRAM price and thus to carve out a better market environment for Rambus memory. The court date with Infineon will start on April 20, 2001. At a pre-trial hearing, Judge Robert Payne has already ruled that Rambus’ patent does not include synchronized memories that are not data line multiplexed. That has essentially rule out any infringement from SDRAM and DDR memories. Of course, the verdict is not out until the court days are over.
SDRAM to DDR Conversion
Due to the recent depression on SDRAM price, memory manufacturers are eager to make the conversion to DDR. Since the die size and processing technology of DDR are the same as SDRAM, the cost should ultimately be the same. However, the DRAM manufacturer do want to take this opportunity to recover their development cost by charging a premium for DDR memory at this time. At the same time, memory manufacturers want to burn-off their surplus inventory on SDRAM before they move to establish a mass production on DDR.
The Micron DDR Price Parity
Perhaps Micron is the first memory manufacturer to have depleted their SDRAM inventory. They have announced in February that they will make DDR200 chips the same price as equivalent capacity SDRAM. However, they are reluctant to reduce the price of their DDR266 that runs at a faster speed. This scene is, however, signifies the loosening up of the DDR supply and price.
The Hyundai Capitalization
Hyundai Semiconductors merged with Gold Star Semiconductors last year and has been holding 16-20% of the world DRAM production. In the process of the merger, it had incurred excessive debt. They were counting on the DRAM market upturn to reduce their debt in the second part of 2000. Unfortunately, the DRAM market and price had turned south in September 2000. No significant recovery is in sign. For the time being, U$3 billions of notes is coming into due before summer 2001. Hyundai is in desperation to raise the amount to stay in business. So far, Hyundai has raised $1 billion through Korean government supported instruments. It is also planning for a $1 billion US deposit notes sale this summer. This deposit note sale will depend on the US economy and the semiconductor industry performance at the time.
For the time being, Hyundai has implemented a restructuring plan to cut cost. It had separated its DRAM operation with other semiconductor operations. It has scaled down its DRAM production and converted some capacity into non-DRAM fabrications. It had also changed its name to Hynix to reflect the new company and the new structure. They are hoping that the financial market will buy into this new image.
Even with all these work, there is no telling that Hynix will be able to raise the needed capital on time. The best case would be that they survive as a not-so-major DRAM producer. Or in the worst case, they will seize production totally and leave the world DRAM supply 16-20% short. In that case, it might start a global price surge on DRAM and benefit all the remaining DRAM producers.
Chipset and Motherboard Bundling
Ali and Via Technology of Taiwan are the two chipset companies that came out with DDR enabled PC chipsets last year. Their chipsets has been widely accepted by most motherboard companies. However, the OEM manufacturers like Compaq and Dell are still reluctant to adapt. In order to drive the DDR chipset market, Via has decided to go ahead with aggressive marketing targeting first the “white box” and “bare-bone PC” manufacturers. Indeed, it has partnered with memory module manufacturers like Kingston and Apacer to bundle the DDR modules with their chipsets. At the same time, they have also tided up Nanya as a DDR DRAM supplier for their quantity production. This strategy would accelerate the acceptance of the DDR memory technology. It would put the DDR enabled system in consumers’ hands by June, 2001. At the same time, it would drive the DDR memory price down on a steeper curve.
OEMs Look for Performance Stability
As for the OEM PC manufacturers, they are hesitating with the DDR+P3 solution since Intel has promised to replace the P3 with P4. Although the AMD processors are working fine with the DDR enabled chipsets, the P4 DDR chipsets are still in the prototype stage. OEM manufacturers are torn between going ahead with the Athlon line of processors now or wait for the P4+DDR to be available.
On the other front, they also want the option of populating with either SDRAM or DDR memory modules. That means the motherboard design will be more critical and the performance will be less stable. Well, performance doesn’t always come with flexibility. It is reported that the OEM and chipset companies have been working on this issue for the last few months. It is not likely that a perfect solution would be found any time soon. This might delay the OEM entry into the DDR PC until the 2nd half of the year.
With all the above variables on the memory market, we will have a difficult time to predict when will DDR memory entrenched into the market. However, one thing sure is that DDR will eventually be the crown Jewell. It will only come only when it reaches price parity with the now popular SDRAM.
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