Micron Technology is entering the graphics memory business, going up against heavyweights Samsung and Hynix.
Micron is targeting its memory at the upper mid-range of the graphics chip market
(Credit: Nvidia)Micron, which recently vaulted to the No. 3 spot in global sales of dynamic random-access memory (DRAM), is now aiming at the market for DRAM chips used with graphics processors from Nvidia and Advanced Micro Devices' ATI graphics unit.
The market for DRAM used with graphics processors is about 4 percent of the bits shipped into the DRAM market, according to Micron. DRAM is typically used as the main memory in PCs. This type of DRAM is also referred to as Synchronous DRAM, or SDRAM.
"Our upcoming 50-nanometer technology is very competitive when it comes to power consumption and performance," Robert Feurle, Micron's VP of DRAM marketing, said in a phone interview Thursday.
"I think it's a good point in time to begin discussions with big enablers Nvidia and AMD and get started with some design-ins," Feurle said.
Micron is making its debut with Double Date Rate 3 (DDR3) memory. This is the same type of memory used for the main memory of currently shipping PCs, which have gravitated from DDR2. In the future, Micron will look at making more proprietary graphics memory, referred to as GDDR3 and GDDR5. "No decision has been made yet but we're looking into that very seriously," Feurle said.
Initially, Micron is targeting the "upper mid-range" of the graphics processor market.
Micron says its DDR3 has a distinct power consumption advantage over GDDR3: standard DDR3 can go down to 1.35 volts. "GDDR3 is still running a 1.8 volts. We have a giant power savings advantage," he said.
Micron is targeting memory with speeds of 1600MHz "to get started with and going up from there," Feurle said.
The DRAM market overall has seen sliding sales, falling 20 percent in the first quarter from the fourth quarter and 44 percent from the year-earlier period, according to iSuppli. The problem is overcapacity, which has most notably brought Taiwan memory makers to their knees. In that country, some manufacturers have faced possible bankruptcy.
"Micron now has renewed its competitive vigor, mainly due to its acquisition of a 300mm fab from Inotera in Taiwan," iSuppli said recently. Fab refers to fabrication facility or factory.
Bad news for Hynix is translating into good news for the memory chip industry.
The world's second largest memory chipmaker will close its U.S. plant and slash production 30 percent, bringing relief to an industry plagued by glut.
This comes in the wake of a 30 percent cut in flash chip production at Toshiba and SanDisk announced Monday.
As part of this reduction in output, Hynix is expected to sell its U.S. production unit before the end of the year, according to a Reuters report citing a story in the Seoul Economic Daily on Thursday.
All of this is good news for Micron Technology. The U.S.-based manufacturer of DRAM and flash memory has seen its shares surge over the last few days. Shares traded around $2 at the start of trading Wednesday; as of 11:40 a.m. PST Friday they were trading as high as $2.99.
The news is boosting shares for Taiwan manufacturers too. Taipei Times is reporting that the news of Hynix's production cut plans has had a positive impact on the shares of domestic memory suppliers Powerchip Semiconductor and Nanya Technology.
"Every little bit helps and this is more than a little bit," said Avi Cohen, managing partner at Avian Securities, responding to an e-mail query about Hynix. "This is the kind of news we need to see for things to eventually get better."
In a research note, Cohen said the Hynix output cut should translate to about 5 percent of industry capacity.
In related news, Micron will announce its first-quarter financial results for 2009 on Tuesday. Avian Securities said it is cutting its November estimate ahead of the call to revenue of $1.18 billion (down 17 percent quarter to quarter) from $1.42 billion.
iSuppli releases its preliminary 2008 top-20 chip rankings as semiconductor suppliers fall upon hard times.
Intel, Samsung, Texas Instruments, Toshiba, and STMicroelectronics occupy the top five positions, while Advanced Micro Devices was No. 11 and Nvidia No. 20 in the ranking.
Memory chip manufacturers are some of the hardest hit. South Korea-based Hynix, which dropped from No. 6 to No. 9, and Micron Technology (No. 16) are both restructuring. Micron is reducing staff and shutting down facilities, while Hynix seeks outside investors.
Micron is expected to post a 9.2 percent revenue decrease in 2008 and Hynix's revenue should dive by about 29 percent in 2008, iSuppli said.
The world's largest memory chip supplier and the world's No. 2 chipmaker, Samsung Electronics, is set for a 9.1 percent revenue decline for the year, the market researcher said.
Toshiba, a major flash memory chip manufacturer, is expected to post a 5.9 percent decline in chip revenue in 2008.
iSuppli said 2008 will go down as "a year to forget" for memory chip suppliers.
.jpg)
Preliminary 2008 worldwide ranking of the top 20 chip suppliers
(Credit: iSuppli)Munich, Germany-based Infineon (No. 10) said Wednesday it expects 2009 revenue to fall at least 15 percent from the previous year. Infineon makes chips for automotive and communications devices, but is also a large player in the memory chip market through its subsidiary Qimonda.
Global semiconductor revenue is expected to decline by 2 percent in 2008 due to a 16.9 percent plunge in sales of memory integrated circuits (ICs), iSuppli said. "Only two out of the Top-29 memory IC suppliers, i.e. companies that are expected to earn roughly $100 million or more in 2008, will see their memory IC revenue grow in 2008. For the memory IC business, 2008 can only be described as disastrous," Dale Ford, senior vice president of market intelligence services for iSuppli, said in a statement.
The downturn in semiconductor revenue in 2008 is not limited to memory suppliers. Six of the top-10 chip suppliers are expected to see revenue falls in 2008, including some companies that are not focused on memory, including Texas Instruments, Renesas Technology, and Sony, according to iSuppli.
"In the face of increasingly negative economic news, orders for semiconductors have virtually stopped," the market researcher said.
"About the only good thing that can be said about the 16.9 percent decline in memory revenue in 2008 is that it pales in comparison to the 48.2 percent plunge in 2001," Ford said.
And a few companies have been performing relatively well. Based on an expected revenue growth of 19.6 percent, Qualcomm is expected to jump five places to No. 8 in the rankings in 2008, up from No. 13 in 2007, iSuppli said.
Memory chipmakers are fighting for their life.
The memory chip market--and industry--is caught in a particularly brutal downward price spiral that is threatening the viability of even the largest players.
"Memory manufacturers who have already been losing money for several quarters are now looking at another six months to a year of absolutely ominous conditions," said Avi Cohen, managing partner at Avian Securities.
Companies are now in survival mode, according to Cohen. "It is a matter of survival and everyone needs to figure out how to stay in business over the next year or how to scavenge something if one (company) decides it cannot survive," said Cohen.
Currently, two major memory chip manufacturers are seeking investment lifelines. Hynix, the world's second largest maker of memory, is trying to scare up cash by seeking buyers for a 36 percent stake in the company. So far, the only likely bidder to emerge is Samsung--which has also made a play for struggling SanDisk, the largest supplier of retail flash memory cards.
The other ailing memory maker is Qimonda AG--an Infineon Technologies subsidiary. Rumors have been rife that the manufacturing assets of the loss-ridden company will be snapped up.
All of this turmoil was underscored this week when Micron Technology, the largest U.S. maker of memory, announced that it had lost $1.6 billion in fiscal 2008.
"The DRAM business--it just doesn't feel like that, for many companies, it's sustainable," said Ron Foster, chief financial officer at Micron, speaking during the company's earnings conference call on Wednesday.
The average selling price for NAND and DRAM has dropped sharply since May.
(Credit: Micron Technology)Pricing has fallen off a cliff in the last few months, making a bad situation worse. Micron said Wednesday that the average selling prices of DRAM chips--the main memory used in PCs--was down between 15 percent and 20 percent from last quarter. NAND flash prices were down between 30 percent and 35 percent. (NAND flash is used as storage in portable music players, digital cameras, and the nascent solid-state drive market.)
The NAND price crash has forced Micron and Intel to delay the "build out" of manufacturing capacity in Singapore, which is part of their joint flash memory venture, IM Flash Technologies, Micron said Wednesday.
"Overall, the NAND market continues to be in an oversupply condition," said Micron's Foster.
This is affecting investment. "The capital expenditure for the NAND market in 2008 is going to be down sequentially (year-to-year), which is the first time that's happened since the inception of the market," said Steven Appleton, chairman and CEO of Micron on Wednesday.
The PC market has also turned bleak. "The PC business was plugging along pretty well and then all of sudden in the last months the demand profile has just really dropped off," according to Foster.
All these negatives add up to a cruel market that is forcing some companies to either merge or perish. "This is leading to a new wave of forced consolidations and partnerships. This industry will look very different a year from now with very few players controlling much larger market shares and with a much better ability to control production and pricing," said Cohen.
This consolidation is not only affecting manufacturers but players in the retail channel too. SanDisk--which does not manufacture flash chips but sources them from a Japan-based joint venture with Toshiba--has seen its stock price plunge more than $60 per share over the last two years. This has made it vulnerable. SanDisk's chairman and CEO, Eli Harari, said last month that the $26-a-share bid from Samsung was "opportunistically timed at the trough of an industry-wide downturn."
Not everything is doom and gloom. The market for solid-state drives--which use NAND flash--is poised to grow. Appleton cited the burgeoning netbook market as an opportunity for SSDs. The enterprise is a target market too: SSDs based on single-level cell (SLC) technology can offer many times the performance of hard disk drives for customers such as credit card companies and airlines.
Ultraportable laptops, such as the ThinkPad X301 and Dell Latitude E4200, are also beginning to use SSDs as a storage replacement for hard disk drives.
The price decline for solid-state drives over the last quarter makes these drives "more attractive from an end user's perspective," Micron said Wednesday, adding that "NAND far exceeds DRAM growth demand rates."
- prev
- 1
- next
