July 2000 Industry Update

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DRAM Update

Due to increased demand, spot prices for 64Mb SDRAM chips bounced around between $7.50 and $9.00, and may go even higher over the next few months. This has provided manufacturers with a nice cash flow, and a disincentive to move away from the technology too quickly. Samsung is reportedly forecasting prices to go to $10 soon.

DDR

Micron appears to be going full steam ahead with their DDR plans. A spokesperson for the company informed me that unregistered DDR modules should be released this month. Earlier estimates of volume shipments in Q3 have been dampened somewhat because of the strength of SDRAM pricing. The company now feels that volume shipments will not happen until mid-Q4 (October/November), however should there be activity in late Q3 they will be ready to supply the market.

Despite some hopeful cries of victory by Rambus supporters, some of whom predicted additional SDRAM and DDR license agreements within a few weeks of the Toshiba and Hitachi deals, resistance against Rambus only seems to have strengthened. There are rumors of litigation against Rambus pending from the major memory manufacturers, though lengthy court battles are generally the last thing any company wants.

Though most memory manufacturers would obviously prefer to pay no royalties on SDRAM (SDR or DDR), such payments are actually quite common in the industry and account for only a small percentage of the overall cost. Many times it is the long term costs that determine the course of action taken. It is possible that any legal action might be used as leverage against Rambus to encourage equivalent royalties between DRDRAM and DDR. While Rambus may have a lot of cash right now, the combined financial strength of the top memory manufacturers could keep the lawyers quite busy, and could be a strain on Rambus profits over the next few years.

DRDRAM

Samsung has adjusted their estimates of the DRDRAM market and are now looking for it to comprise 20% of their overall shipments. They believe it will grab 10% or 15% of the market in 2001. Part of this is in anticipation of higher DDR prices due to royalty payments to Rambus.

As reported last month, NEC has reduced wafer allocation for DRDRAM due to higher SDRAM demand (and prices), but are looking for higher density parts to become more popular (primarily due to better pricing). Micron was anticipating DRDRAM shipments in Q3, however they have pushed that back into Q4 for the same reason.

Overall, the outlook for DRDRAM has not improved appreciably despite the licensing victories of last month. The next several months should reveal the direction that memory manufacturers have decided to take – will they simply give in to Rambus claims and pay license fees for all synchronous DRAM parts, or will they pull out their own heavy artillery and fight to maintain control of their own destinies?


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