After being reminded once again last year that it is better not to rush a new promising technology to market unless conditions are actually good enough to push the platform, Taiwan memory module houses are taking a more conservative approach and they do not expect DDR2 to dominate their module shipments before the fourth quarter of 2006. The companies remain cautious in their outlooks for the next four months despite market assumptions that both leading processor vendors will soon increase their efforts to push DDR2 in the market.

A-Data Technology, the third-ranked DRAM module supplier worldwide and number one in Asia (according to iSuppli rankings for third-party DRAM module suppliers in 2004 and 2005), is one of the makers that expect to see DDR2 overtake DDR for its module shipments in the fourth quarter. Last month, the DDR-to-DDR2 ratio among A-Data shipments was 70:30, but the company intends to shift to 60:40 for the second quarter as a whole. August 2005 was the first time in A-Data's history that the company reported a year-on-year (YoY) revenue decline. Later, the company had four consecutive months of YoY revenue declines, from December 2005 to March 2006, but the company managed to stop the negative trend in April and reported YoY growth of 1.9%. A-Data hopes its total revenues in 2006 will be 20% higher compared to last year, according to the company.

Kingmax Semiconductor (8th in 2004 and 11th in 2005 in iSuppli rankings) is more optimistic about its DDR2 shipments, projecting that the DDR2 contribution will jump from 25-30% currently to 50% in the third quarter and then 70% in the fourth quarter.

The company recently had nine consecutive months where it reported YoY revenue losses, from May 2005 to January 2006, but the company explains the decline was mainly due to the transfer of its channel operations for flash memory products to Kingmax Digital, another company in the Kingmax Group, according to Lawrence Chang, vice president of sales and marketing at Kingmax. He confirmed recent news saying that Kingmax Digital has a plan to apply for trading on Taiwan's over-the-counter (OTC) market and expects to list on the OTC in 2007. This year, Kingmax Semiconductor reported YoY revenue increases in February and March.

Power Quotient International (PQI), which was ranked 17th in 2004 and shared 16th position with US-based Viking InterWorks in 2005, has a more conservative outlook on DDR2, saying it will likely contribute about 50% of PQI module shipments in the fourth quarter. The company sees the current market situation as not well balanced because of underpriced DDR2 DRAM chips, but it believes the issue should be resolved by the end of this year. According to PQI, DDR2 shipment orders now exceed earlier projections of DRAM makers.

Similarly to other Taiwan memory module houses, PQI recently posted YoY revenue declines, including five consecutive months from September 2005 to January 2006. According to the company, the revenue drops were primarily related to the negative news about PQI financial issues in the first half of 2005. This year, PQI revenues grew in February, March and April. Last month, the company opened an office in Korea.

All three companies agreed that a lack of DDR2-800 and DDR2-1066 standard specifications, which have not yet had a final approval from JEDEC, still hinders them from leveraging DDR2 sales. According to Chang, there is a chance that the DDR2-800 specification gets the approval at the end of 2006 or even later. A-Data stated that its current expectations for DDR2 shipment growth is mainly related to the Windows Vista operating system, which will likely be launched by the end of this year. Kingmax added that the newest release of AMD processors will definitely help to drive DDR2 module sales, but Intel's impact remains the key point for the memory module industry.

Intel has already stopped its validation program for DDR memory chips and modules, and AMD has released its first CPUs with built-in DDR2 memory controllers, known as the Socket AM2 platform. Intel has also accelerated its schedule to commence shipments of CPUs based on the new Intel Core microarchitecture (Woodcrest, Conroe and Merom), with Woodcrest being launched today as the Dual-Core Intel Xeon processor 5100 series. Conroe and Merom will follow in the third quarter.

By: DocMemory
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