Elpida’s DRAM sales soar in Q2; DRAM market up 34pc

EL SEGUNDO, USA: Japan’s Elpida Memory Inc. was the star of the global DRAM market in the second quarter, with a robust increase in its pricing causing its revenue to surge by 50 percent from the first quarter, according to iSuppli Corp.

Elpida posted the strongest performance among the Top-5 DRAM suppliers in the second quarter, with revenue rising to $745 million, up from $497 million in the first quarter. Company performance was boosted by a robust 32 percent rise in its DRAM ASP in the second quarter compared to the first.

“Elpida accomplished its strong increases in revenue and pricing by expanding its specialty DRAM sales to mobile and consumer applications,” said Nam Hyung Kim, director and chief analyst for memory ICs and storage at iSuppli. “These specialty DRAMs command higher prices than commodity parts, allowing Elpida to outperform its competitors.”

The table presents iSuppli’s top-10 DRAM supplier ranking the second quarter.

iSuppli: Top-10 DRAM Supplier Ranking the Second Quarter (Ranking by Revenue in Millions of US Dollars)Source: iSuppli, Aug. 2009

The news comes amid a strong performance for the overall DRAM market, with revenue reaching $4.5 billion in the second quarter, up 34 percent from $3.4 billion in the first quarter. This contrasts with a 19 percent decline in the first quarter compared to the fourth quarter of 2008.

“Due to a shortage in DDR3 parts and to buyers’ inventory re-stocking efforts, the per megabyte price for DRAM jumped by 18 percent in the second quarter, an unusual increase for a market that customarily sees its prices decline during each quarter,” Kim added.

This 18 percent rise was much higher than iSuppli’s previous forecast of a 2.6 percent increase.

Megabyte equivalent unit shipments of DRAM also grew by 14 percent, surpassing iSuppli’s estimate of 6.2 percent and resulting in a dramatic improvement in overall market conditions.

The other big winner during the second quarter was Taiwan’s Winbond Electronics Corp., whose revenue doubled, rising to $87.6 million, up from $44 million in the first quarter.

Tier-1 results mixed
Among the other Tier-1 suppliers, results were mixed. The Top two South Korean companies -- Samsung Electronics Co. Ltd. and Hynix Semiconductor Inc. -- captured 55.9 percent of the global market, with DRAM sales for each company increasing sequentially by more than 30 percent during the second quarter.

Micron Technology Inc. of the United States saw its share of DRAM revenue dip to 13.9 percent in the second quarter, down from 14.3 percent in the first quarter, owing to the very strong sales growth of the other Tier-1 DRAM suppliers. However, Micron’s second-quarter revenue declined by only 15.2 compared to the same period in 2008, the lowest level of decrease among the Top-10 DRAM suppliers in the second quarter.

Taiwan’s Nanya Technology Corp. also performed relatively well on the year-over-year comparison, with only a 15.4 percent decline in revenue.

“The relatively limited declines of Micron and Nanya, which recently entered a partnership, showed that the companies are seriously striving to increase their scale to become more competitive in the market,” Kim said.

DDR3 shortage continues until the end of the year
iSuppli believes that the recent shortage of DDR3 DRAM will persist through the end of this year.

Limited capital investments will continue to delay the migration to the 5x nanometer process until the first quarter of 2010. Until that time, DDR3 supply will continue to be tight in the market.

The DDR3 shortage recently has been making PC OEMs panic. A few OEMs are considering reducing their DDR3 adoption by returning back to DDR2 as most of Intel’s current chipsets still support dual modes (i.e. DDR2 and DDR3). The momentum of the price increases will definitely decelerate.

However, tight supply will persist and PC OEMs' profit margins are expected to be challenged in the second half of 2010, Kim said.

Kingston adjusts 2GB module up by 30pc leading to upward spot market pricing

TAIPEI, TAIWAN: According to DRAMeXchange, Kingston, the worldwide memory module leader, adjusted DDR2 2GB module to $23.5 from $20.

Currently, the most updated price is $26.5. This movement also lead to the upward pricing trend in spot market, resulting in the 32 percent rise in DDR2 1Gb 800Mhz to $1.45 from $1.10 in mid-July, while DDR2 1Gb eTT hiked 37 percent to $1.44 from $1.05 on July 15. DDR3 1Gb 1333Mhz also nearly reached 30 percent to $2.12 from $1.65 on July 15.

Kingston lowered 2GB module price to $20 from $23 for the sake of stimulating sales and smoothed inventory level with negative view toward DDR2. In July, Kingston reveals the concern toward DDR2 supply in 4Q09 given the boosting demand from PC-OEMs and aggressive transition to DDR3 by Elpida-most important DRAM supplier for Kingston. It is believed that Kingston is seeking to secure the DDR2 supply in 2H09 by re-financing to PSC.

DDR2 shortage is expected in spot market; 1Gb chips will likely to reach $1.5 and likely to go higher

Elpida, PSC and Nanya are regarded as the main suppliers in spot market accordingly. Elpida is said that their DDR3 wafer-in portion will be around 40 percent of total commodity DRAM while Nanya will apply Micron’s technology to produce DDR3.

However, DDR2 will remain the mainstream transaction target in spot market by the year end and DDR3 portion is estimated less than 10 percent. Therefore, DDR2 products will face shortage in spot market and $1.5 will likely to be achieved.

According to our survey about DRAM consumption, Kingston can be ranked in No. 2 place that consume more DRAM than Dell and Acer. Kingston has always retained good relationship with DRAM vendors.

In order to secure the DRAM supply, Kingston tends to be the angel to DRAM vendors when they are in troughs. Before 2008, around 50 percent of ProMOS shipment went to Kingston but that situation changed since ProMOS couldn't produce 1Gb chip afterwards.

With the expanded capability that Rexchip has, Kingston’s relationship with Elpida has gotten closer. Relatively high portions of Elpida’s output in PSC and Rexchip eventually went to Kingston. However, DDR2 in spot market will be influenced under the aggressiveness of DDR3 transition of Elpida.

DRAMeXchange expresses that in the beginning of this year, PSC worked hard negotiating with Kingston regarding to the bailout plans and the negotiation turns positive when $158 million ECB redemption plans are agreed by 96 percent of bondholders.

In 7/9, PTI declared to inject $17 million to PSC through Kingston. That is, total bailout funding for both PTI and Kingston amounted US$125M and the money is limited to the use of daily operation and debt payment. At the meantime, PSC will largely expand DDR2 capacity to meet demand from Kingston.

With the aggressiveness DDR3 transition of two major suppliers in spot market, Elpida and Nanya, PSC will become the other major supplier for Kingston given the expanded capacity.

Elpida enters graphics memory business; acquires Qimonda's technology licenses

TOKYO, JAPAN: Elpida Memory Inc., a leading global DRAM supplier, has reached an agreement with Germany-based Qimonda AG, which is now in insolvency proceedings, to acquire Qimonda technology licenses and a portion of the design assets related to Graphics Double Data Rate (GDDR), a memory architecture that has a high-speed data interface for graphic processing applications.

Based on the licenses and assets acquired from Qimonda, Elpida will now join the graphics DRAM business and become a memory solutions company with an expanded range of products and services.

Elpida plans to quickly ramp up a full-fledged GDDR business. GDDR technology development will continue at Elpida's recently built Munich Design Center (Elpida Memory Europe GmbH, Munich branch), where nearly 50 engineers and other former Qimonda employees involved in GDDR development work will take up new posts. Shipments of 1-Gigabit GDDR3 and 1-Gigabit GDDR5 products are expected to begin in the first half of CY 2010.

The production of both products is considered to be outsourced to Winbond Electronics Corporation, a Taiwanese company that has experience with Qimonda's process technology.

Also, following additional development work by a highly qualified team of engineers working jointly in Germany and Japan, Elpida plans to begin mass production of 2-Gigabit GDDR5 at its Hiroshima Plant starting in the second half of CY 2010.

Because of its high-speed data transfer capability, GDDR is well-suited to graphics processing, which makes it a popular engineering solution among makers of advanced game consoles. GDDR technology is also well-established as a graphics solution among high-end desktop and notebook PCs.

Only a limited number of global DRAM vendors are capable of supplying products across multiple business areas, starting with commodity DRAMs and extending to graphics GDDR DRAMs, high-speed XDR™ DRAMs and Mobile RAM™ for mobile equipment.

By becoming one of the few full-range suppliers, Elpida expects to now play an increasingly important role in the DRAM market.

"Graphics systems now need graphics buffer memory with a data transfer rate of more than 5-Gigabit/sec given the rapidly growing popularity of high-definition format graphics data, 3D graphics and various display formats," said Takao Adachi, Elpida's Chief Technology Officer.

"In response to this need we will shortly begin commercial production of GDDR5, for which an even faster data transfer rate of 8-Gigabit/sec may be feasible in the near future. To achieve such high speeds advanced technologies for I/O signal transmission as well as internal high speed circuits are crucial. The important GDDR technologies we have acquired can now contribute not only to Elpida's graphics memory development but also to the improvement of our overall DRAM design technologies."

Elpida's products have received superior evaluations from customers in both the mobile DRAM market, which places emphasis on low power consumption, and the server DRAM market, which values a high degree of memory reliability.

With its entry into graphics DRAMs, a market that places a premium on extremely fast speeds, Elpida will now be involved in all areas of the DRAM market. This will enable the company to expand its customer base, improve customer support and establish a considerably stronger business foundation.

TMC files business plans for restructuring Taiwan DRAM industry

I generally expect to hear such developments happening in Taiwan, simply because of my great admiration for this country!

According to a published report from the Taiwan News, Taiwan Memory Co. (TMC) has filed its business plan for restructuring the country's DRAM industry.

TMC is said to have officially filed its business plan with the Ministry of Economic Affairs (MOEA), Taiwan. TMC plans to develop its own technologies in collaboration with Japan-based Elpida Memory Inc. It is so far the only company that has filed its business plan to bid for funding.

For those who came in late, Taiwan's DRAM industry has been having problems for some time now due to an oversupply of local makers, who are relatively small compared to South Korean counterparts. The Taiwan government proposed consolidating all of the DRAM makers into one company -- TMC.

Elpida to get funds from government, Taiwan Memory

This is a very important news, courtesy, MarketWatch!

By Lisa Twaronite, MarketWatch
TOKYO (MarketWatch): Elpida Memory Inc. will receive 50 billion yen ($521 million), the government said Tuesday, much of it as part of Japan's new recapitalization program for struggling non-financial companies.

Japan's Ministry of Economy, Trade and Industry said Elpida will get 30 billion yen from the Development Bank of Japan by the end of August in exchange for preferred shares.

The infusion is part of a new program is aimed at supporting companies whose failure the government fears could have a broader economic impact.

"Elpida faces a very tough environment," Economy, Trade and Industry Minister Toshihiro Nikai was quoted as saying in several reports from the region. "DRAMs are widely used by major industries in our country, and securing the stable supply of them will benefit people's lives, as well as economic and industrial activities."

Taiwan Memory Co., a chipmaker set up by the island's government, plans to invest an additional 20 billion yen by the end of this fiscal year ending in March 2010, the ministry also said.

Elpida Memory Inc. President Yukio Sakamoto reportedly told a news conference Tuesday that the fund injection under the government's new aid program was the best option available for the chip maker to secure funding and remain competitive.

Last month, Japan's only maker of dynamic random access memory chips posted a group net loss of 178.8 billion yen for the fiscal year which ended in March, deeper than its 23.5 billion yen loss for fiscal 2007.

Pioneer, NEC next?
Other Japanese firms are expected to follow Elpida's move to seek funds.

Pioneer Corp., which anticipates a sixth consecutive year of losses this fiscal year, is now making preparations to apply for a public fund infusion, Japanese business daily Nikkei reported Tuesday.

NEC Electronics Corp. and Renesas Technology Corp. are also expected to consider taking action if their planned merger next April goes through as expected, the report said.

In Tokyo, Elpida shares closed up 1.4 percent, and NEC Electronics gained 4.2 percent. But Pioneer shed 1 percent.

The benchmark Nikkei 225 Average rose 1.8 percent.

Lisa Twaronite reports for MarketWatch from Tokyo.

Rambus XDR DRAM surpasses 100 million units shipped

LOS ALTOS, USA: Rambus Inc., one of the world's premier technology licensing companies specializing in high-speed chip architectures, announced that its customers have shipped over 100 million XDR DRAM devices worldwide. XDR DRAM is part of a total memory solution developed by Rambus.

The award-winning XDR memory architecture achieves an order of magnitude higher performance than today's standard memories. With the flexibility to provide more bandwidth at better power efficiency per device than competing technologies, XDR memory both reduces overall systems costs and delivers the performance needed for the most advanced electronic products.

“Consumers’ demand for increasingly powerful graphics and computing applications require superior memory bandwidth and power efficiency,” said Sharon Holt, senior vice president of Licensing and Marketing at Rambus. “The XDR memory architecture has proven an ideal solution for a broad range of products needing blazing fast speeds and excellent power efficiency. No other memory technology provides the flexibility the XDR architecture offers to system and chip designers.”

The XDR memory architecture features key enabling technologies built on patented Rambus innovations that include low-voltage, low-power Differential Rambus Signaling Level (DRSL); Octal Data Rate (ODR) technology that transfers eight bits of data each clock cycle; FlexPhase circuit technology for precise on-chip alignment of data with clock; and Dynamic-Point-to-Point (DPP) for both enhanced signal integrity and scalability.

Key components enabling the breakthrough performance of the XDR memory architecture are:

* XDR DRAM is a high-performance memory that turbo-charges standard CMOS DRAM cores with a high-speed interface capable of 7.2Gbps data rates providing up to 28.8GB/s of bandwidth with a single DRAM device.

* XIO controller IO cell provides the same high-speed signaling capability found on the DRAM, but adds additional enhancements like FlexPhase technology that eliminates the need for trace length matching.

* XMC memory controller is a fully synthesizable logical memory controller that is optimized to take advantage of innovations like Dynamic Point-to-Point which provides for capacity expansion while delivering the signal integrity benefits of point-to-point signaling.

* XCG clock generator provides the system clocks with four programmable outputs and is guaranteed to meet the clocking requirements for the XIO and XDR DRAM devices.

XDR DRAM is available fromleading memory suppliers Elpida and Samsung Electronics. It has been adopted in high-volume products, including the Sony PLAYSTATION3 computer entertainment system, DLP projectors, Teradici PC-over-IP computing systems, and Toshiba’s Qosmio laptop PCs and HDTV chipsets.

DRAM contract prices to rise 10-15 percent MoM in May

TAIPEI, TAIWAN: Sources indicate that the biggest DRAM spot market suppliers, Powerchip and Elpida, have stopped shipping chips to the spot market, resulting in tighter supply, says DRAMeXchange. Therefore, DDR2 1Gb spot prices have stayed strong at US$1.2. Meanwhile, marketers expect to see the prices move towards US$1.5 by end of June.

According to DRAMeXchange’s survey, DRAM contract price, the “low” in May is expected to move to the range of US$9-US$10 per GB from the US$8 to US$8.5 per GB in April, up roughly 15 percent MoM. Some DRAM makers are even aggressively setting the target up to US$12 or US$13 per GB for May. The tier-one PC OEMs expect to see a mild growth, while the tier-two or tier-three PC OEMs may be forced to accept US$11-US$12 per GB price in May, DRAM makers indicated.

DRAMeXchange notes that the PC shipment growth in February, March and April reached 3.1 percent, 16.8 percent and 5.3 percent, respectively. The better than expected PC shipment helped consume PC OEMs' DRAM inventory.

As DRAM makers sharply cut back on production and control their respective inventory in hoping to push DRAM prices higher, DRAMeXchange believes the DRAM upward trend can continue through 3Q09 and the low price of the 1GB chip can reach US$12. If DRAM makers continue to maintain production cuts and inventory control, DDR2 1Gb may soon reach US$1.5.

New camps promise exciting times ahead in memory market

The last few weeks of this month witnessed some interesting developments in DRAM. No, there are not signs of a recovery, yet. Instead, the appearance of new DRAM camps, as well as a new memory interface working group, does generate some interest.

However, first, the stats. DRAMeXchange recently reported that the Q1-08 revenues of the branded DRAM makers, impacted by continual low DRAM prices, fell by roughly 5.8 percent compared to Q4-07. Likewise, the contract prices and the spot prices fell 19 percent and 11 percent respectively.

DRAMeXchange further reported that barring Elpida and Powerchip, all other DRAM makers experienced a decline in revenues. Both Elpida and Powerchip witnessed slight increase in their market share during Q1-08.

Categorizing the DRAM industry market share by countries, Japan only increased by 0.9 percent from 13.5 percent to 14.4 percent, as Elpida's revenue increased in Q108. Taiwan's share increased by only 1.1 percent from 13.6 percent to 14.7 percent, as Powerchip gained market share. Korea sustained the same market shares -- 47.2 percent, as in Q4-07.

However, America and Germany lost share. America's share slipped from 13.6 percent to 13 percent, while Germany's share fell from 12.2 percent to 10.8 percent, respectively.

In a recent investor conference, Samsung announced it will increase its Bit Growth Rate from 70 percent to 100 percent, an indication of its desire to continue reigning as a DRAM market leader.

Now, to the really interesting developments. First, Nanya and Micron signed an agreement to create MeiYa Technology Corp., a new DRAM joint venture. One of Nanya's 200mm facility in Taiwan will be upgraded to 300mm starting this year, with the facility going online for production in 2009. Besides MeiYa, Nanya and Micron will co-develop and share future technology.

If this wasn't enough, close on the heels of the Micron-Nanya JV, Elpida Memory and Qimonda AG, signed a Memorandum of Understanding (MoU) for a technology partnership for jointly developing memory chips (DRAMs), and accelerate their roadmap to DRAM products featuring cell sizes of 4F2.

Analysts at DRAMeXchange believe that the Qimonda-Elpida alliance re-shuffles the DRAM competitive landscape. It is also a sign of Qimonda's determination to develop stacked process.

Lastly, ARM, Hynix Semiconductor Inc., LG Electronics, Samsung Electronics, Silicon Image Inc., Sony Ericsson Mobile Communications AB, and STMicroelectronics announced the formation of a working group, the Serial Port Memory Technology (SPMT), which is committed to creating an open standard for next-generation memory interface technology targeting mobile devices.

SPMT, a first-of-its-kind memory standard for DRAM, is said to enable an extended battery life, bandwidth flexibility, significantly reduced pin count, lower power demand and multiple ports by using a serial interface instead of a parallel interface commonly used in today's memory devices.

Handset vendors have joined the fray as this technology will not only extend battery life, it will allow high-performance media-rich applications as well, that are likely to be the norm on next-generation mobile phones.

Surely, these developments and the emergence of new camps promise some exciting times ahead in the memory market.