DRAM market threatens to consolidate business

Will Micron, Samsung and Japan Inc. come to control the memory chip market,

with Infineon as a minor additional player? From a broad field of almost two

dozen companies just five years ago, the extreme volatility of the DRAM market

threatens to consolidate the bulk of the business among three or four entities.

Whether that is healthy or not remains to be seen. On the one hand, prices in

the market will likely fluctuate less than they have in the past as the big

producers will be able to prevent too large of a glut of memory supply to build

up. On the positive side, more advanced generation of DRAM chips will come to

market quicker as the mega memory producers will have the means to build

advanced new fabs quickly To be sure, the DRAM industry has fallen way behind

earlier technology roadmaps. Back in 1996, it was projected that the bulk of the

memory chips would be 1 Gigabit by now with 4 gigabits in early production

stages. Several producers, like Samsung were proudly proclaiming to be able to

produce 1 gigabit DRAMs as early as 1996.

Instead the majority of the market is still 64 megabit with 256 megabits

ramping up. Since 1996, the DRAM market has fallen quite a bit behind schedule

in terms of Moore's law. At nearly $2 billion apiece, DRAM fabs are just too

expensive to build for most companies, even at today's low interest rates. And

DRAMs remain highly unprofitable, unlike microprocessors where Moore's law

remains on course.