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Elpida, Qimonda may set up joint manufacturing activities
In April, Elpida and Qimonda finalized an agreement under which they would develop technology platforms and design rules to allow exchange of products and potential manufacturing joint ventures, which seemed to point to the potential of manufacturing work together.
By Ann Steffora Mutschler, Senior Editor -- Electronic News, 8/8/2008
Following Tokyo-based DRAM player Elpida Memory Inc’s announcement Wednesday that it plans to set up a 300-mm wafer fab in China with a venture investment group that leverages technology created jointly with Qimonda AG, the Munich, Germany-based Infineon memory spin-off is confirming that the two companies are continuing to discuss manufacturing partnership options, according to a Qimonda spokesperson.
In April, Elpida and Qimonda finalized an agreement under which they would develop technology platforms and design rules to allow exchange of products and potential manufacturing joint ventures, which seemed to point to the potential of manufacturing work together.
Also at the time, the companies said they would align development activities at their respective sites in Hiroshima and Dresden, including the exchange of engineers, as well as explore joint development opportunities in the areas of through-silicon via technology and future memories.
Qimonda’s technology offering – Buried Wordline -- that it disclosed in February, is aimed at allowing DRAM designs at the 40-nm and below level; learnings and expertise from this technology will be leveraged and combined with Elpida’s stack technology in the new Elpida China fab, noted Glen Haley, North America communications director at Qimonda.
Although Elpida’s announcement did not include Qimonda, Haley said the company views it as, “Very positive for us. It adds capacity for that node.”
Haley also could not confirm if Qimonda were part of the venture investment group, but did say “We have a broad cross licensing that allows us to have a wide berth of design freedom in developing new technologies, and we continue to discuss manufacturing partnership options.”
This partnership between DRAM players is just par for the course, with relationships seen at all levels of the memory business, due to the competitiveness of the DRAM industry.
Elpida may be seen as taking an aggressive approach, which could be partially explained by its fiscal Q1 results announced Thursday that included a bigger than expected quarterly loss.
Even market researchers at iSuppli Corp today noted in a report Elpida’s behavior in Q2. The El Segundo, Calif-based market research company noted that Elpida has gotten aggressive to catch Hynix.
iSuppli noted that although Hynix grew its DRAM sales by 20%, Elpida increased its sales by 22%, thereby keeping a market share distance of 4% points between the two. Hynix gained nearly 20% of the market while Elpida’s market share increased to more than 15% during Q2.
Meanwhile, Elpida in 3rd place, with foundry partner Powerchip, in 6th place, increased megabyte unit by 26 and 38%, respectively.
“The market share battle between Hynix and Elpida could delay the market recovery. Elpida clearly wants to be number 2 soon while Hynix will try to reduce its NAND growth and to increase DRAM production to retain its market share,” asserted Nam Hyung Kim, director and chief analyst for memory ICs/storage systems at iSuppli, in a statement.
In a quarter that faced a tough market following months of losses, Q2 was tumultuous for the top 10 DRAM suppliers with a mixture of poor profits and sequential megabyte unit growth, iSuppli said.
Samsung maintained its position as number one DRAM supplier with more than 30% market share in Q2, while Qimonda’s position dropped to just 9% market share during Q2, making it the fifth largest DRAM maker. The company, which captured 16% market share just two years ago, has now lost 7% of that growth as other DRAM suppliers have forged ahead.
Interestingly, iSuppli pointed out one of the more noticeable developments coming from suppliers’ Q2 results is that the industry unit growth has not slowed down, at least, not yet.
“The industry megabyte bit growth grew by a stunning 17% sequentially during the second quarter, blowing iSuppli’s forecast of 10%. The unit growth doesn’t seem to be slowing down either and is even higher than that of the first quarter. The positive side is that the PC market has been sound. However, oversupply may be inevitable in the third quarter due to OEMs’ aggressive inventory build-up during the second quarter,” Kim noted.
All DRAM suppliers could face turbulent times ahead as after experiencing a mild recovery in Q2, the global DRAM market is showing renewed signs of weakness, with prices expected to fall during Q3 due to bloated inventories, iSuppli believes.
iSuppli reminded that after it upgraded its rating of near-term conditions for DRAM suppliers to “Neutral,” up from “Negative” on April 25, the market bottomed out and manufacturers’ profitability improved during Q2. Following months of losses, a few top-tier suppliers managed to attain profitability starting in June and a handful are expected to do so in Q3.
But the market is showing renewed warning signs, with OEM contract prices for DRAM likely to decline in August and September, with the main question now facing the industry is how much prices will decline during Q3.
iSuppli concluded that it believes it will be over 10% from the current level.
