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| Vecta on DRAM | ||||||||||
| DRAM. Once the golden goose created by the mighty Intel that powered them to a world-leading position in semiconductors and went on to power the PC from its feeble 64K origins; but now the commodity that few - and soon fewer - can afford to make. |
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| While
demand for Intel-architecture x86 PCs was growing
exponentially and Microsoft's operating system and
applications demanded more memory with each release,
demand for DRAM grew super-exponentially. Intel left the market years ago as Japanese majors, like Toshiba, invested in the plants and automation to increase volume and density while consistently reducing prices. Leading edge design was effected by consortia, such as that by IBM, Siemens and Toshiba, hoping to create premium for advanced technology devices before commoditisation reduced margins. Korea's LG, Hyundai, and Samsung used soft financing to build even more advanced plants and churned out commodity chips at rock bottom prices. Eventually even Hyundai and LG had to merge, forming Hynix. Siemens floated its semiconductor subsidiary Infineon and focused on advanced designs produced in leading-edge plants to remain competitive. In 2000, Samsung held around 21% of the global DRAM market, Micron Technologies a further 19%, Hynix around 17%, and Infineon around 9%. Toshiba, and smaller Japanese and Taiwanese players supplied most of the remainder. Today, Samsung and Micron dominate. However chip densities are now expanding more quickly than market volume so shipped quantities must inevitably shrink, except in times of extreme growth which are becoming rarer. |
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| Lessons from past mergers, like the one between Hyundai and LG that created Hynix, show that it can be difficult to identify how value and debt should be shared, which partner should dominate the new venture, and which criteria to use when identifying facilities to close. These problems will be far worse if, as suggested, the next merger is between the culturally very different Micron Technologies and Hynix. | ||||||||||
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| More info from: Terry.Moore@vecta5.com | ||||||||||
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