This is the hour
My last article, called “The R Word”, argued that the DRAM and memory market in general had become so utterly dire that regulation was needed to rescue the business and protect jobs and investment. I was wrong. What a difference a week makes. In just one week, we have seen the following unprecedented events:
- LG Semicon and Hyundai announce the merger of their DRAM businesses
- Fujitsu closes its DRAM factory in Durham, England
- Hitachi closes its DRAM fab in Irvine, California
- Mitsubishi closes its module production and test in Durham, NC, USA
- These events follow the closure of Siemens DRAM plant in Tyneside, England. The rate of announcements seems so great that one wonders where the next closure will take place. The really sad news of course is the loss of so many jobs. However, it seems ironic that this should happen just as we have seen the first solid price increases to take place in many, many months. The increases were slight and at the end of last month they looked certain to lose their grip. Despite pressure from brokers dumping through lack of nerve, prices held. One month ago, a 4MX4 EDO device was selling for as little as a $1.15 (and even less on the grey market) but prices are now holding steady at a $1.80. 64Mb SDRAM is now at a solid $9+ across the board with the exception of one manufacturer selling one configuration. A further irony is that these terrible factory closures are happening just as digital TV is about to be launched in the UK. The publicity surrounding digital TV is centred on the features and benefits of the medium to the user. For me, as a DRAM salesman, the truly great news is that every single digital TV and digital satellite receiver contains DRAM of one sort or another. In fact for, digital read DRAM. Practically every single digital device you will ever start buying is going to contain DRAM or another memory product. It goes on. New UDMA hard drives have 512k DRAM buffers, new models will shortly have 1MB buffers. DVD drives have between 2-4MB of RAM. Printers now have more memory. Photocopiers too now have memory in them. Whilst the DRAM manufacturers have made crucifying losses they have also been making huge numbers of devices. Actual DRAM ‘bit’ output has grown beyond any predictions ever made. This made the pricing worse, and all the while designers of both hardware and software have become blasé about the availability and price of memory. It’s cheap, it’s plentiful and it eases design considerations. Digital means DRAM. As digital becomes all pervasive two things are going to happen. The DRAM vendors will rely less on demand from PC assemblers and overall, DRAM demand will grow. Those executives that decide the fate of DRAM plants and production will have to develop the strongest funambulism skills to ensure that we never again experience the over supply issues of the last two years. For with these events of the last weeks, could it be that this is the hour? DRAM production has really, seriously started to be cut back. More cut backs will surely follow. (Japan has a financial problem every bit as big as Korea) This then could be the time when we will look back and say that the DRAM market started to turn. For many it may already be too late, but turn it has and turn it will and this could be the hour that the long, slow turn around at last starts. ®
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