DRAM, flash fabs too pricey for single players, firm says

By Ann Steffora Mutschler, Senior Editor -- Electronic News, 5/14/2007

Not surprisingly, except for the largest of the large, the cost required to build and equip a state of the art DRAM or flash fab is becoming too large for a single company to build alone, according to San Luis Obispo, Calif.-based market research firm Strategic Marketing Associates.

The company said its April quarterly fab report says that manufacturers of DRAM and NAND flash are in the process of coalescing into just a few groups to share both development and fab costs.

“We estimate the Toshiba-SanDisk joint venture -- Flash Alliance -- will spend as much as $10 billion to fully equip their newest fab,” says George Burns, president of Strategic Marketing Associates, in a statement.

Flash Alliance‘s 300-mm Fab 4 is expected to have a capacity of 210,000 wafers a month. “If Fab 4 were a country, it would be ranked number eight in terms of capacity, just behind France, but ahead of Ireland,” Burns noted.

Given that the average capacity of a 300-mm DRAM or NAND flash fab has risen from 40,000 wafers in 2004 to 60,000 by the end of 2006 and will reach 80,000 wafers by 2009, increasing capacity increases cost which has pushed manufacturers to seek alliances, the firm reminded.

Except for Samsung and ProMOS, all major DRAM and NAND flash memory manufacturers have formed joint manufacturing ventures that involve technology licensing as well as development.

“Most of these alliances are fairly new, except for Toshiba/SanDisk and that led by Qimonda. The IM Flash alliance joint venture with Intel and Micron was formed at the end of 2005, Rexchip was formed last year and the Hynix/SanDisk alliance this year. But, regardless of their age, these alliances are becoming more and more essential,” Burns said.

As a group, these companies will more than double their DRAM and NAND flash capacity by the end of 2010, the firm estimates with the total cost of these DRAM and NAND fabs exceeding $100 billion.  “This growth would not be possible without these alliances,” he asserted.

Strategic Marketing Associates estimates the value of new fabs beginning production this year will be $31 billion, 58 percent of which will be DRAM and NAND with their share next year to be even higher.

Capacity of Major Memory Companies and Alliances (2006-2010)

(000)'s 200-mm equivalent wafers/month