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Elpida to ask customers to buy future capacity assurance
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Tuesday, November 19, 2002
Elpida Memory Inc.'s new president, a former foundry executive, appears to be borrowing from the foundry rule book of capacity planning.
Yukio Sakamoto, who previously headed the Japan operations of United Microelectronics Corp., said that in return for supply assurances, Elpida will ask customers to buy a small equity stake in the Tokyo-based DRAM joint venture, though no such deals are in the offing yet, he said.
"Customers tell us they are worried about future supply, particularly of DDR," Sakamoto said in an interview. "So we're asking them for some small investment to guarantee capacity."
Customer forecasts indicate DRAM demand, measured in bits, will increase 60% to 70% in 2003 -- up from about 50% this year -- as memory content increases in each PC, laptop, and cell phone that ships, he said.
Having recently struck a deal to take over the DRAM business of Mitsubishi Electric Corp., Elpida has been rumored to be in the market for additional chip partners. But Sakamoto said Elpida isn't actively looking to expand the alliance. Rather, the company is focused on integrating Mitsubishi's DRAM business and putting enough capacity in place to support anticipated demand, he said.
To that end, Elpida has completed construction of its 300mm-wafer fab in Hiroshima, Japan, and production is slated to begin in January, according to Jim Sogas, vice president of North America sales in Santa Clara, Calif.
The new fab is a start toward Elpida's goal of obtaining 50% of its production needs internally. Today all of Elpida's production comes from foundry sources, primarily NEC Corp. and Hitachi Ltd., the original partners in the DRAM joint venture.
A recently announced foundry pact with Taiwan's Powerchip Semiconductor Corp. will provide a second source for Elpida's 300mm lines, which will initially run a 0.11-micron process, Sakamoto said.
Asked whether Powerchip will formally join Elpida, Sakamoto didn't rule out the possibility. "We may discuss with Powerchip a further alliance, but today they are just a foundry," he said.
The plan is by January to complete the transition of Mitsubishi's DRAM product lines to Elpida. Of foremost concern is ensuring continuity of supply for legacy products as Mitsubishi's business is consolidated with Elpida's, Sogas said.
Under the deal, Elpida can begin accepting DRAM orders from Mitsubishi customers in April.
Now the fifth largest DRAM supplier counting Mitsubishi's DRAM business, Elpida aims to become a Top 3 player within two to three years by maintaining equilibrium between internal and foundry supply, and by focusing product development on fast-growing non-PC applications, according to Sakamoto.
"Our product development strategy is this: if we develop 10 devices, at least five of them must have No. 1 market share worldwide," he said.
"Today 80% of our business is in PC applications, but mobile and consumer markets are expanding rapidly," he said. "These markets are where Japanese companies are traditionally strong. We plan to capitalize on this inherent strength."
By: DocMemory
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