CapEx – The Memory Guy Blog

Emerging Memory Report Updated

Tom Coughlin and I are proud to announce that we have released an update of our popular emerging memory report. This report, titled Emerging Memories Ramp Up, covers all leading emerging memory technologies from PCM and 3D XPoint through MRAM and ReRAM to less-known types like carbon nanotubes and polymeric FRAMs.

Anyone who makes or uses memory chips, or who is involved in this ecosystem as an investor or tool supplier needs to read and understand this study to prepare for one of the biggest changes in the history of the chip market. The report’s wealth of information will allow companies to make strategic plans to gain a competitive edge.

The report’s forecast model has determined that the emerging memory market will grow to $20 billion by 2029 largely by displacing today’s less efficient Continue reading “Emerging Memory Report Updated”

Why are NAND Flash Fabs so Huge?

Many readers have probably wondered why NAND flash fabs are so enormous. Although DRAM fabs used to be the largest, running around 60,000 wafers per month, NAND flash fabs now put that number to shame, running anywhere from 100,000-300,000 wafers per month. Why are they so huge?

The reason is that you need to run that many wafers to reach the optimum equipment balance. The equipment must be balanced or some of it will be sitting idle, and with some tools costing $50 million (immersion scanners) you want to minimize their idle time to the smallest possible number. I am sure that this is a tough problem, although I have never had to solve it myself.

The most important reason that so much attention is focused on this is that the cost of the wafer depends on the efficiency of the fab. If you built a $13 billion NAND flash fab that produced 90,000 wafers per month instead of 100,000 wafers per month, then the amount of investment per wafer would be 10% higher. That can make a significant difference to Continue reading “Why are NAND Flash Fabs so Huge?”

Understanding Samsung’s DRAM CapEx Cut

According to a Business Korea article Samsung announced, during a June 14 investor event, plans to reduce its DRAM capital spending and shift its focus to 3D NAND.

The Memory Guy sees this as an unsurprising move. This post’s chart is an estimate of DRAM wafer production from 1991 through 2014. There is a definite downtrend over the past few years. The peak was reached in 2008 at an annual production of slightly below 15 million wafers, with a subsequent dip in 2009 thanks to the global financial collapse at the end of 2008. After a slight recovery in 2010 the industry entered a period of steady decline.

The industry already has more than enough DRAM wafer capacity for the foreseeable future.

Why is this happening? The answer is relatively simple: the gigabytes per wafer on a DRAM wafer are growing faster than the market’s demand for gigabytes.

Let’s dive into that in more detail. The number of gigabytes on a DRAM wafer increases according Continue reading “Understanding Samsung’s DRAM CapEx Cut”

3D NAND’s Impact on the Equipment Market

A very unusual side effect of the move to 3D NAND will be the impact on the equipment market. 3D NAND takes the pressure off of lithographic steps and focuses more attention on deposition and etch. The reason for going to 3D is that it provides a path to higher density memories without requiring lithographic shrinks.

This sounds like bad news for stepper makers like ASML, Canon, and Nikon while it should be a boon to deposition and etch equipment makers like Applied Materials, Tokyo Electron, and Lam Research.

In its summer 2013 V-NAND announcement, Samsung explained that it would be Continue reading “3D NAND’s Impact on the Equipment Market”

Is NAND Headed for Lower Bit Growth?

Someone recently asked The Memory Guy to comment on a projection that NAND flash bit consumption was headed into a period of reduced growth. This appears to have stemmed from a comment made by another memory analyst.

This drove me to compile this report’s graphic, which compares historical bit growth for DRAM (bottom, black line) against that of NAND flash (upper red line). Although NAND started out with astronomical annual bit growth of nearly 250%, it declined in 2011 to around 70%. This brings it closer to DRAM’s rate that ranges around 50%.

This is not cause for alarm – when the NAND market was very small bit growth was expected to be high. Large demand upturns could be relatively easily accommodated. Today’s multibillion-dollar capacity additions require more careful planning. This is the Law of Large Numbers.

We are at a point where NAND bit growth will probably settle into a range similar to that of DRAM. Consumption will be limited by economics, since production increases involve huge capital expenditures.

So, in a way, we are more headed out of a period of declining bit growth than going into one.

Objective Analysis has produced a report: Understanding the NAND Market, that is available for immediate download from our website.

Why DRAMs are Like Steel

Over lunch today I had a conversation with an alum of McKinsey Consulting who remarked that the DRAM business behaved in a way that was similar to the McKinsey Steel Model. For those unfamiliar with this model I found a slideshow HERE that refers to it a good deal. (So far I have not found a tutorial on the model itself, but if anyone knows were to find it The Memory Guy would highly appreciate hearing about it.)

One interesting thing is that this particular McKinsey alum was not the first to point this out to me. About 15 years ago a family friend/McKinsey alum told me exactly the same thing. It seems that the economics of the DRAM business have changed little over the past 15 years, and the McKinsey steel model applies to DRAMs just as well now as it did then.

In a nutshell, the model posits that the market price for Continue reading “Why DRAMs are Like Steel”