Hynix rations DDR supply

Rocketing demand

Hynix's US subsidiary is placing its supply of DDR DRAM fast memory on allocation. In other words, major customers will have to wait for product, or they will only get a percentage of the product they ordered.

In turn, this will mean - if other major vendors follow suit - that spot market supply will quickly dry up and prices will rise - maybe even overtaking historically expensive Rambus RDRAM.

This is a short-term thing - demand for DDR DRAM is rising sharply with the arrival of Intel's Brookdale chipset which supports DDR. Lower P4 prices is also stoking demand, with OEMs swapping over from cheaper, slower SDRAM and - we guess, although there's no market share figures yet - from RDRAM. Supply has not yet caught up. But it will. And sure as eggs is eggs, DDR DRAM prices will fall again.

In the meantime, who can blame Hynix for trying to make some money out of making DRAM for a change. The company owes $7bn to creditors, its business is still lossmaking, despite recent price rises, and it is having great trouble selling itself to Micron, the US rival.

Micron wants to pay no more than $3.1 billion, while Hynix's creditors say they need at least another billion dollars. Talks have stalled, no more are planned. Unless Hynix's creditors blink, this deal won't happen.

Which would be good news, certainly in the short term, for system builders and end-users. Consolidation provides a quicker route to killing excess DRAM capacity and means less competition. This means higher prices.

It means more pain of course for DRAM makers. ®

( BW)(CA-HYNIX) Hynix Announces Allocation of DRAM Product Family to Strategic Customers

Business Editors/High-Tech Writers

SAN JOSE, Calif.--(BUSINESS WIRE)--Jan. 29, 2002--Hynix Semiconductor America Inc. today announced it has implemented an allocation plan for all DRAMs, including both Single-Data-Rate (SDR) and Double-Data-Rate (DDR) product families. Due to recent increased demand and a supply shortfall, Hynix has elected to apportion memory products to its strategic and contractual customers for the remainder of the first quarter 2002.
This latest surge in DDR and SDR SDRAM consumption at Hynix has been driven by a number of factors occurring in the industry. Personal computer prices have become more affordable as a result of the introduction of the Brookdale Chipset supporting Intel P4 with SDR and DDR, a reduction in P4 pricing, and a growing appetite for more memory to operate the most advanced operating systems such as, Microsoft Windows XP. In addition, an increase of sales in consumer electronics such as DVD, set top boxes and handheld devices, has also fueled memory demand.
At the same time, inventory levels have been bled off while a number of memory suppliers consolidated and cut back capacity due to IC manufacturers suffering the worse year in history. Plans for new 12-inch wafer fabrication plants have been slow to materialize due to a substantial required investment and no new 8-inch wafer fab capacity has been added. In response to this shortage, Hynix has transitioned from 0.18 to 0.15-micron geometry and developed their `Blue Chip' technology to meet the needs of increased electronic system sales.
"The memory market is cyclical in nature--experiencing oversupply and shortages, " said Farhad Tabrizi, Vice President of Worldwide Memory Marketing. "Customers can achieve a balance through strategic partnerships with their key DRAM suppliers, by forming long-term agreements and building solid supplier/customer relationships."

About Hynix Semiconductor Inc.

Hynix Semiconductor Inc., based in Ichon, Korea, is an industry leader in the development, sales, marketing and distribution of high-quality semiconductors -- including DRAM, SRAM, Flash memory and application specific standard products -- as well as semiconductor manufacturing foundry services. While Hynix Semiconductor is one of the world's leading DRAM suppliers, the company is rapidly diversifying its product portfolio to meet the needs of emerging markets. The company offers deep sub-micron foundry services to strategically broaden its overall presence in the industry and achieve the goal of leading the global semiconductor market. Hynix has research, production, sales and marketing facilities strategically located worldwide.
Hynix Semiconductor America Inc. is a U.S. subsidiary of Hynix Semiconductor Inc. and is headquartered at 3101 North First Street, San Jose, California, 95134. For more information on Hynix Semiconductor visit www.hynix.com or www.us.hynix.com.