In a surprise development, manufacturing costs for 512-MBit Double Data Rate 2 (DDR) SDRAM have reached the crossover point with those of equivalent-density DDR, an event that will trigger a rapid increase in DDR2 production for the remainder of the year, iSuppli Corp. believes.

News of the crossover comes as somewhat of a shock, given that many had expected that high expenses for DDR2 packaging and testing would keep the newer memory's costs higher than those of DDR for some time to come. However, rising production volumes for 512-Mbit DDR2 have offset its increased testing and back-end costs and the part now is cheaper to produce than 512-Mbit DDR.

DDR2 shipments in the 512-Mbit density already exceeded those of 512-Mbit DDR in the first quarter. Shipments of 512-Mbit DDR2 amounted to 132 million units during the first three months of the year, compared to 104 million for 512-Mbit DDR, according to iSuppli. This shipment crossover led to the cost crossover as the economy of scale due to mass production asserted itself.

However, the suppliers appear to be ahead of market demand in regards to DDR2.

Due to the only marginal performance benefits it delivers, DDR2 still has limited market penetration. The highest-volume DRAM remains the 256-Mbit density DDR.

DDR2 demand will not reach shipment crossover with DDR1 until DDR2 677 appears in the second half of 2005, iSuppli predicts.

The starting gun for DDR2 677 will sound at the Computex Taipei trade show in Taiwan, which starts May 31, when Intel Corp. will introduce more PC core logic chipsets that support the 1066-MHz Front-Side Bus (FSB) and DDR2 677. When this occurs, suppliers will quickly ramp up DDR2 677 production in order to take advantage of the present price premium.

By: DocMemory
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