Elpida – The Memory Guy Blog

DRAM Prices Down, But Not So Bad

For the past ten months DRAM prices have been undergoing a steady slide. Is the market in a crisis? Not really!

Today’s low spot price of $4.30/GB puts us on a par with February 2013, a full two years ago (see chart). DRAM makers have done a lot to reduce their production costs since that time, so their margins this quarter will be much better than they were in the first quarter of 2013.

But we are still a very long way from the bottom of the last market downturn. In late 2012 spot prices reached a low of $2.52/GB, a full 41% lower than today’s lowest spot prices.

The Memory Guy models the production costs of leading memory chips, and DRAM manufacturing costs have been decreasing for the past several years at an average annual rate of about 30%. That means that costs today are about half of what they were two years ago, and one third of their level this time in 2012.

So even though today’s Continue reading “DRAM Prices Down, But Not So Bad”

Rambus and Micron Sign License Agreement

The following is excerpted from an Objective Analysis Alert that can be downloaded from the company’s website.

Rambus and Micron announced on Tuesday that they have signed a patent cross license agreement. Micron receives rights to Rambus IC patents, including memories. Both Micron and Elpida products will be covered. The companies have thus settled all outstanding patent and antitrust claims in their 13-year court battle.

Micron will make royalty payments to Rambus of up to $10 million per quarter over the next seven years, totaling $280 million, after which Micron will receive a perpetual, paid-up license.

Rambus and Micron both have Continue reading “Rambus and Micron Sign License Agreement”

Does the ‘Windows Bump’ Really Exist?

DRAM manufacturers often refer to “The Windows Bump” – a phenomenon that is believed to occur after every release of a new version of the Windows operating system. According to this theory DRAM demand increases for a period following an introduction.

An example: in a recent article Kingston VP Scott Chen said that an increase in sales for Windows 8 might help raise DRAM demand, leading to more stable prices.

Demand is expected to pick up on the upcoming launch of Windows 8 tablets and Ultrabook PCs later in the second half of 2012.

Does the Windows Bump really exist? The Memory Guy thought Continue reading “Does the ‘Windows Bump’ Really Exist?”

Samsung Revenues Reflect NAND Price Increase

NAND prices have increased since July, and that appears to have helped Samsung to increase its memory revenues in the past quarter. That comes as a welcome change!

As this post’s graphic illustrates the company has has seen downward-trending memory revenues for five of the past six quarters, but Q2 revenues increased by ten percent. Interestingly enough, the last quarter-to-quarter increase was a miniscule 0.3% one in Q2 of 2011. It looks as if growth tends to regularly occur in Samsung’s second quarter.

Last quarter’s revenue growth helps to debunk rumors that Samsung was Continue reading “Samsung Revenues Reflect NAND Price Increase”

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”

Figuring Out Who Shipped What

Today I saw an announcement from another market research firm about a new report with flash memory market shares for 2011. I found it remarkable that the way these chips are counted varies enough that the company decided to openly discuss this issue right in the press release for the report!

Memory market statistics are compiled by numerous firms: The World Semiconductor Trade Statistics (WSTS) sold in the US and Europe by the Semiconductor Industry Association (SIA), Gartner Dataquest, IHS iSuppli, Web Feet, Semico, Forward Insights, and even DRAMexchange. Lots of entities use conflicting definitions of what is and what is not a chip. This causes each company’s numbers to differ from the others’.

In the case of WSTS, a chip that is packaged with another chip into a board becomes Continue reading “Figuring Out Who Shipped What”

Elpida Files for Bankruptcy

Elpida today filed for bankruptcy. The troubled DRAM manufacturer has been unprofitable for the past five quarters and was facing repayment requirements that the current market would prevent the company from meeting.

The company is the world’s third largest DRAM maker, and is the last remaining Japanese DRAM company. This is particularly stunning for DRAM industry veterans, since Japanese DRAM makers were at one time the largest in the world. NEC used to be the world’s largest semiconductor manufacturer based largely upon its DRAM revenues.

Objective Analysis has issued an Alert covering this news. It can be downloaded for free from the Objective Analysis Reports page.

Elpida Finally Makes Statement

For months rumors have abounded regarding Elpida’s viability and plans the company has to overcome its current financial woes. Although the company has been questioned about advanced payments and loans from its customers, takeover and merger possibilities, and even government intervention, Elpida has remained silent, refusing to comment.

Today the company finally made a statement that it will be adding a note to its Q3 results and earnings report: “on Matters concerning the Assumed Going Concern.”

This statement, which looks like it was written very carefully by either Continue reading “Elpida Finally Makes Statement”

Elpida ReRAM Prototype

Elpida announced the development of a high-speed 64Mb non-volatile resistance memory (ReRAM) prototype using a 50nm process. The device was jointly developed with the New Energy and Industrial Technology Development Organization (NEDO), a Japanese-funded public institution.

Elpida will conduct further ReRAM development with Sharp Corporation, the National Institute of Advanced Industrial Science and Technology (AIST, another Japanese public institution) and the University of Tokyo.

It’s encouraging to see that Elpida still has its eye on projects into 2013 and beyond. The company is rumored to be working feverishly to find ways to stay in business through this year. Today’s DRAM market is a challenging one!

Continue reading “Elpida ReRAM Prototype”

DRAM Consolidation in 2012?

2012 is likely to be a year in which the DRAM market consolidates a little bit more.

Consider this:

At its peak in the late 1980s the DRAM market sported 23 suppliers.
Today there are 6 suppliers of any note: Samsung, Hynix, Micron, Elpida, Nanya, and Powerchip
The already-depressed market is only going to worsen in 2012. Capital spending in 2010 is seeing to that. Although many believe that prices cannot get any lower, that is exactly what they will do in 2012. Continue reading “DRAM Consolidation in 2012?”