Friday, August 5, 2005
As suppliers of semiconductor memory chips diversify their product lines, the volatile pricing and supply cycles long characteristic of products such as dynamic random access memories (DRAMs) could someday become a thing of the past, according to iSuppli Corp. market analyst Nam Hyung Kim.
In a prss interview, Kim said suppliers are continuing to shift production to other types of memory, such as NAND flash, a move that would lessen their investment risk but complicate procurement for OEMs.
“Suppliers want product diversification,” Kim said. “If you have a diverse product line you can mitigate risk.”
That trend is occurring already. South Korea-based Hynix Semiconductor is converting some of its production capacity from DRAM to NAND memory, and archrival Micron Technology Inc. is trying to do the same, Kim noted.
It will not be that easy. The rapidly growing NAND flash market is expected to reach $36.1 billion in 2008, according to a Semico Research Corp. report. But Kim noted that Samsung—the leading supplier of DRAMs--- also has a strong position in NAND flash, along with Japan-based Toshiba.
“Lots of buyers in NAND flash concerned about the dominance of Samsung,” Kim said. “Samsung is ahead on technology investment.”
The entrance of additional suppliers in the NAND flash market could stimulate price competition there. But Kim warns changing product mixes could reduce the leverage OEMs have traditionally had in negotiating contracts for commodity memory parts like DRAMS. “It’s not good news to the buyer,” Kim said. Computer companies used to control this market quite easily. They now have to understand what goes on in the NAND flash market. Buyers need to be more educated.”
By: DocMemory
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