Battling for survival, computer memory — or dynamic random access memory (DRAM) — chipmakers are pinning their hopes on forming alliances to weather the most severe slump in the industry’s history. They seek to reduce risk by sharing capacities and investments on next-generation plants, which could reach US$5 billion each.
Last Thursday, Qimonda AG and Elpida Memory Inc, which belong to two different technological camps, announced they would jointly develop next-generation DRAM technologies, marking the latest cooperation among DRAM players.
Elide is also reportedly in talks with ProMOS Technologies Inc (茂德科技) to save the nation’s third-largest DRAM maker from deep losses by buying a single percentage stake. ProMOS lost NT$7.32 billion (US$241 million) last year.
In the first quarter alone, the nation’s major DRAM suppliers — top player Powerchip Semiconductor Corp (力晶半導體), Nanya Technology Corp (南亞科技) and its venture with Qimonda, Inotera Memories Inc (華亞科技) — posted a total of NT$22.8 billion in losses.
Analysts, however, doubt industry consolidation will help DRAM makers turn around on the back of serious oversupply, stemming from huge capacities built up over the last three years.
“Although some might get excited that this industry is consolidating, we are holding a less optimistic view,” George Chang (張家麒), who tracks the DRAM sector for Citigroup, said in a report released right after the announcement of the Qimonda-Elpida deal.
“However, meaningful reduction in supplies would appear remote in this case [Qimonda/Elpida] as well as in the case of the Micron/Nanya deal,” Chang said.
Nanya Technology, the nation’s second-largest maker of computer memory chips, signed an understanding of memorandum last Monday to form a DRAM joint venture, MeiYa Technology Corp (亞美科技), with Micron Memory Inc of the US to make chips in Taiwan and to develop new technologies.
“From an industry perspective, ideally it would be best if we saw marginal players exiting or being taken out by larger players in this tough environment,” Chang said.
However, it seems that most DRAM players are willing to go all out to stay in the market as they have invested heavily in building 12-inch plants, which was quite different from the last trough in 2001, said Joyce Yang (楊雅欣), an analyst with market researcher DRAMeXchange Technology Inc (集邦科技), based in Taipei.
“Samsung Electronics Co’s latest plan to raise its DRAM shipments to 100 percent from the original 70 percent this year — a move aimed at getting a bigger slice of market share — will exacerbate the situation,” Yang said.
DRAM makers may get a short reprieve later this year in expectation of a 30 percent price rebound amid easing oversupply as supply might be capped by technological transition in those new alliances, Yang said.
Nanya Technology expects contract DRAM price to rebound more than 10 percent next month alone and said supply could become a constraint in the second half of this year and next year, implying prices will rise further.
But, Samsung’s plan to accelerate output expansion could dash these hopes as the likelihood of a price recovery may shrink on growth in supply and possible price cuts from the South Korean company, Yang said.
“DRAM players face a rough road ahead,” Yang said. “Technological transition is one thing; how to raise funds for migration is another thing.”
Inotera said it planned to raise NT$10 billion by selling corporate bonds rather than selling new shares later this year. Nanya Technology also planned to raise NT$10 billion.
SEMICONDUCTORS: The firm has already completed one fab, which is to begin mass producing 2-nanomater chips next year, while two others are under construction Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, plans to begin construction of its fourth and fifth wafer fabs in Kaohsiung next year, targeting the development of high-end processes. The two facilities — P4 and P5 — are part of TSMC’s production expansion program, which aims to build five fabs in Kaohsiung. TSMC facility division vice president Arthur Chuang (莊子壽) on Thursday said that the five facilities are expected to create 8,000 jobs. To respond to the fast-changing global semiconductor industry and escalating international competition, TSMC said it has to keep growing by expanding its production footprints. The P4 and P5
DOWNFALL: The Singapore-based oil magnate Lim Oon Kuin was accused of hiding US$800 million in losses and leaving 20 banks with substantial liabilities Former tycoon Lim Oon Kuin (林恩強) has been declared bankrupt in Singapore, following the collapse of his oil trading empire. The name of the founder of Hin Leong Trading Pte Ltd (興隆貿易) and his children Lim Huey Ching (林慧清) and Lim Chee Meng (林志朋) were listed as having been issued a bankruptcy order on Dec. 19, the government gazette showed. The younger Lims were directors at the company. Leow Quek Shiong and Seah Roh Lin of BDO Advisory Pte Ltd are the trustees, according to the gazette. At its peak, Hin Leong traded a range of oil products, made lubricants and operated loading
Citigroup Inc and Bank of America Corp said they are leaving a global climate-banking group, becoming the latest Wall Street lenders to exit the coalition in the past month. In a statement, Citigroup said while it remains committed to achieving net zero emissions, it is exiting the Net-Zero Banking Alliance (NZBA). Bank of America said separately on Tuesday that it is also leaving NZBA, adding that it would continue to work with clients on reducing greenhouse gas emissions. The banks’ departure from NZBA follows Goldman Sachs Group Inc and Wells Fargo & Co. The largest US financial institutions are under increasing pressure
TRENDS: The bitcoin rally sparked by US president-elect Donald Trump’s victory has slowed down, partly due to outflows from exchange-traded funds for the token Gold is heading for one of its biggest annual gains this century, with a 27 percent advance that has been fueled by US monetary easing, sustained geopolitical risks and a wave of purchases by central banks. While bullion has ticked lower since US president-elect Donald Trump’s sweeping victory in last month’s election, its gains this year still outstrip most other commodities. Base metals have had a mixed year, while iron ore has tumbled, and lithium’s woes have deepened. The varied performances highlight the absence of a single, over-riding driver that has steered the complex’s fortunes, while also putting the spotlight
RSS