Tag: hynix

Hynix ditches DRAM for NAND at Wuxi factory

Hynix has decided that it will ditch the DRAM for NAND flash at its Wuxi factory in China.

Although the company was riding high on the DRAM wave, owning about 20 percent of the market last year, it seems it has decided to switch production to NAND as a result of the high revenues promised from the popularity of the Apple product market.  

Apple’s iPad, MacBook Air and Ultrabooks all use 32-128Gb NAND, which has increased the demand for this technology.

According to a report  earlier this week, by 2015 Apple’s NAND products will account for around 58 percent of NAND demand. Its iPad will also drive the need for faster memory with the density of this product expected to grow from 9.4 percent in 2012 to 33.8 gigabytes per unit. Furthermore IHS has predicted that overall shipments will reach 16.3 billion gigabytes into 2015. 

Hynix is, of course, not the only company wising up to NAND. Samsung recently announced that it is planning on setting up a 12-inch wafer plant in China, while Micron and Intel showed off a NAND-Flash joint venture back in December.

In turn this has and will continue to encourage companies to compete against each other in a bid to get a piece of the NAND action. 

Hynix chief executive Kwon Oh-chul told the Korea Herald: “I believe our chance for growth in the memory market is very high since the demand of memory chips with the rise of the smart and mobile eras.”

He added the company comparatively had advantages in technology, quality of products and price competitiveness.

DRAM industry rallies after Elpida bankruptcy

Singapore’s chip makers are ready for the fall out that will be caused by Elpida’s bankruptcy, while over in South Korea Hynix is already seeing the benefits

In a bid to keep the chip industry afloat, Ulf Schneider, president of the Singapore Semiconductor Industry Association (SSIA), said that companies were preparing to drop their prices. 

He added that the industry was prepared for this as it had a “certain upgrade of productivity and technology to support” the price drops as well as innovation that would keep the sector “viable”.

Elpida announced its bankruptcy late last month blaming an all time low in its main product prices. The company folded after admitting it owed $5.5 billion and was unable to claw in its debt repayments for April. 

The move has just four companies now producing DRAM for global demand in Singapore. However, over in South Korea, Hynix isn’t complaining, claiming that it has seen a “marked growth” in the number of clients asking to secure big DRAM orders. 

 “Uncertainty over [Elpida’s] future creates a positive business outlook for us,” Hynix Chief Executive Kwon Oh-chul told Reuters.

Singapore based companies are also trying to make the best of the situation. Avi-tech, a company that sells products and services to the chip industry, told  Channel News Asia that most memory makers have excess capacity, a problem made worse by the huge demand for tablets and smartphones. The company said that it would now expect more consolidation within the chip manufacturing sector. Especially those who had no R&D.

The SSIA said it was confident that the industry will rally against South Korean bigwigs like Samsung and Hynix, with Toshiba and Micron set to help stave off the competition. 

Clearly in the lead with DRAM is Samsung Semi, earlier this month telling Techeye it had no plans to jump into the grave of Elpida, recently departed. Gerd Schauss, director, marketing intelligence told Techeye that Samsung was not interested in becoming a major shareholder, and that Samsung Semi would grow “organically” rather than off the back of the bankruptcy. 

Elpida's bankruptcy causes business boom boon

Elpida’s somewhat unsurprising bankruptcy will solidly kick up prices in the shaky DRAM industry, as competitors are forced to up their average selling prices.

Elpida committed sudden seppuku earlier this week. The Japanese company was known to be in trouble, with over $1 billion debt payments piled up in the company’s inbox. Still, Elpida is considering soldiering on, and manufacturing might continue. Its facilities have not cut their output yet.

Mike Howard, senior principal analyst at IHS, said that it’s unlikely all of Elpida’s production will disappear, however, the developments “could mark a new era for the DRAM market – one marked by stronger pricing power for suppliers.”

If, says analyst group IHS iSuppli, over a quarter of Elpida’s capacity is killed, average selling prices for all DRAM shipments should reach as high as $1.21 by the year’s end – an increase of 15.5 percent compared to $1.05 in the first half of the year. Without reducing capacity, prices will still rise, but a paltry 8.5 percent up to $1.13 by the end of 2012.

Overcapacity worries markets, but so, too, does undersupply – and this is looming on the horizon if Elpida’s capacity goes offline. Shipments will decrease, but the remaining rivals will put up their prices which will, in turn, boost revenues.

Elpida’s manufacturing assets have not been carved up yet, and the debate is still out on what’s to be done. While the board will no doubt mourn the loss-making, Tokyo subsidised DRAM maker, competitors will enjoy what IHS calls a “much rosier” 2012 than the situation was as recently as a week ago.

According to cautious IHS estimates, Elpida popping its clogs could lead to overall revenues for the DRAM market over $30 billion for the full year. Compared to its previous forecast of $24 billion, you’d be hard pressed to find many mourning Elpida’s passing.

Existing Elpida customers are expected to embark on a frenzied DRAM land-grab as they search for alternative sources. Samsung, Hynix, Micron and Nanya will be particularly enthused as they pick at the bones of Elpida’s clients.

DDR4 makes its debut at ISSCC 2012

DDR4 RAM is almost ready for the primetime and will be available next year, if the roadmaps presented this week at ISSCC 2012 are to be trusted.

According to the JEDEC roadmap, DDR4 will make a break into the server market with the ECC variant of the new memory standard, with densities of up to 32GB per DIMM, 1.2V and zooming along at 2133MHz, right where DDR3 gave up the ghost. JEDEC plans on taking the standard up to 3.2GHz, although within the foreseeable future servers will only take up to 2.4GHz.

At ISSCC 2012, both Samsung and Hynix demoed their DDR4 prototypes with 30nm and 38nm technology nodes, respectively, although mass production will begin later this year at 20nm.

DDR4 will not be pin compatible with DDR3, which was to be expected. The DDR4 specs address all the form factors and power specifications at once, but PC desktop clients will only get ‘standard’ DDR4 by mid-2014.

For now, only the South Korean memory makers are introducing DDR4, but Micron, Elpida and Nanya are expected to follow suit before the year’s end.

JEDEC also discussed the requirements for LPDDR3 (low power DDR 3), the successor to the LPDDR2 used in mobile devices such as smartphones and tablets. LPDDR3 will allow dual channel operation and clock for clock, twice the bandwidth, but no info was given regarding the date it will reach the market, although arguably you won’t see it on store shelves.

Elpida DRAM merger would put the wind up Samsung

Elpida may well seem like a sinking ship at the moment, but analysts believe that a revitalising merger with Micron would have even Samsung worried.

The Japanese DRAM maker has been flailing in the wind for some time now, and lurched to new lows earlier this week after admitting “uncertainty” over its future.  Elpida’s share price dropped soon after, with the outlook of even a bail out by the Japanese government looking increasingly unlikely.

With debts mounting, and the difficulty in making money in the DRAM market, analysts having been mulling the effects of an exit by Elpida.   While it is thought that such a move could help drive the industry back to profitability – indeed, as Elpida’s value dropped, others in the industry were buoyed – there are also concerns that a damaging oligopoly could soon be brought about in the market.

However, with Micron waiting in the wings for a merger there is also a chance that the two could team up to give Samsung a run for its money. Currently, Samsung is the only DRAM firm which is able to draw a profit, and owns a large chunk of the market.

Analysts at IHS iSuppli believe that if the will-they-won’t-they DRAM romance actually happens then there could be a serious challenge to money-bags Samsung.

A union between the two would immediately make them the closest challenger to Samsung, with 28 percent of the market compared to Samsung’s 33 percent.  This would cut the usual 10 point gap between Samsung and its nearest rival to just five percent, according to the report.

In terms of production, an Elpida and Micron merger would reach 374,000 wafer starts per month, edging closer to Samsung’s 433,000 WSPM and leapfrogging Hynix’s 300,000 WSPM.

There are some barriers in the way, though.

Firstly, there is Elpida’s large and mounting debts.  With Elpida thought to be owing in the region of $4 billion, debt-shy Micron is likely to be wary.   The strong yen doesn’t make production in Japan particularly attractive either, with cheaper options in Korea and Taiwan.

Furthermore, the partnership between Micron and Nanya could throw in  problems for a merger with another DRAM player.  This, alongside the sad death of Micron CEO Steve Appleton, could well be delaying any potential moves by Micron.

Of course, for both Micron and Elpida there could be sunbstantial gains in any merger.  This would mean Elpida getting its mitts on some of Micron’s higher selling prices, with Elpida’s DRAM selling at $0.70 per gigabyte compared to $1.34 for Micron.  On the other side of the coin it would mean Micron getting stuck into what is one of the few well performing areas of DRAM manufacturing – mobile DRAM.

A merger between the two may not serve the rest of the market so well, as one less supplier leaves the stage and consolidation leads to greater leverage over customers.

It would also mean, however, that the Samsung oligopoly would be foiled with the swift rejuvenation of Elpida alongside Micron putting the wind up the Korean giant.

 

Last Hynix bidder, SK Telecom, completes buyout

Korean semiconductor giant Hynix has had a 21 percent stake carved out of it and claimed by SK Telecom, which has today completed its acquisition for 3.4 trillion won, or $3.021 billion.

The Hynix stake is by far SK’s largest acquisition. SK is planning to invest 4.2 trillion won, or $3.73 billion, into facilities for the company.

That has let Hynix raise 2.3 trillion won, or $2.043 billion in capital through shares to SK Telecom. Ratings agency Standard & Poor’s has brought Hynix’s long-term corporate credit rating and unsecured debt ratings from BB- to B+, which it puts down to its renewed financial flexibility. 

S&P also took Hynix off its CreditWatch list because it thinks its long-term credit rating now appears stable. At the same time, it took SK Telecom’s rating down to A-, but overall, the companies are looking sturdy. Hynix is certainly looking sturdier.

SK Group chairman Chey Tae-won has been promoted to inside director of the company, while SK Telecom president Ha Sung-min and VP Park Sung-wook have also joined the board. Chey is expected, reports the Korea Herald, to either become head of the board or co-CEO at Hynix.

In a statement, Ha Sung-min at SK Telecom said that the new plan is to bring chip manufacturing and telecoms closer together. SK wants to take advantage of the troubled memory chip sector, reports Yonhap, and wants to boost its competition on a global scale. 

There are worries in Korea that SK chairman Chey Tae-won isn’t the best man for the job as he was recently up against embezzlement allegations.

Hynix has not had it easy over the last year or so. Profits for the world’s second largest memory chipmaker were worrying shareholders and the board. Perhaps more importantly, its performance was scaring off interested parties in an auction where it had a hard time convincing anyone that taking a stake in the company was worthwhile. Potential investors began dropping like flies – until SK Telecom was the only bidder left.

DRAM price fixers hatch a deal in Connecticut

Connecticut Attorney General George Jepsen announced that he had reached a $175,000 settlement with four manufacturers of DRAM.

The state claimed Elpida, Hynix, Infineon, and Micron conspired with one another to illegally fix and artificially inflate prices in violation of the Connecticut Antitrust Act.

None of the companies have admitted liability, but agreed to pay the State $43,750 each by March 31, 2012 to sort the matter out.

While the amount of cash is small, it is only one of many actions that the four are facing at the moment.

Micron, Hynix, Infineon and Samsung controlled approximately 70 percent of DRAM sales in the United States between 1998 and 2002, when the conspiracy to fix prices is alleged.

The Attorney General alleged that overcharges paid by manufacturers for DRAM were passed on to people directly in the form of higher prices for computers, printers, networking equipment and other electronic devices.

The DRAM manufacturers were charged with co-ordinating prices they charged to contract and other customers and with reducing supply in order to artificially raise prices.

In 2002 the DoJ launched a criminal investigation and Samsung, Hynix, Infineon and Elpida, and 12 individuals have pleaded guilty to criminal price fixing. They have been fined more than $730 million. Micron also admitted its role in the conspiracy  but was let off because it was the whistleblower on the whole thing.

Connecticut has settled a similar civil complaint against Samsung and Winbond in 2007 as part of a larger multistate group of Attorneys General and is still awaiting distribution of its share of the states’ $10 million settlement. 

Samsung becomes Emperor of the DRAMurai

Korean chaebol Samsung owned 45 percent of the DRAM market revenues in the third quarter, a report from IHS said.

Even though its revenues fell by 8.9 percent compared to the second quarter, it still managed to outperform the rest of the DRAM industry, which is finding itself in challenging times overall. 

The third quarter is, traditionally, a buoyant period for the industry but that didn’t hold true this year.

Mike Howard, principal DRAM analyst at IHS, said that the reason Samsung continued to shine is because it has the largest capex budget, meaning it can both cut costs and introduce new products better than its competitors.

The average selling price for the whole industry fell 26 percent in the third quarter, but Samsung managed a fall of only 17 percent, on an increase of shipments of nine percent, said Howard.

But Micron, the only US DRAM manufacturer, also did well in the third quarter increasing its market share to 12.1 percent squeezing Elpida, which saw its ASP fall by 39 percent. Hynix lost market share too, while Nanya, as the table below shows, had a weak quarter. That, says Howard, is because it is highly exposed to the commodity DRAM market, suggesting an “uphill climb” in the next few quarters.

Revenue figures below are in US$ millions.
DRAM Q3 2011

Rambus loses key patent case

Rambus’s days as a patent troll appear to be numbered after it lost an important $3.95 billion jury trial over its allegations that Micron and Hynix Semiconductor conspired to prevent its memory chips from becoming an industry standard.

A state court jury in San Francisco today by a 9-3 vote rejected Rambus’s claims that Micron, Ichon, and Hynix are liable for colluding to manipulate prices of dynamic random access memory, or DRAM, chips in violation of California antitrust law.

The jury, which had been thinking about it since September, also decided that the two companies were not liable for plotting to interfere with Rambus’s business relationship with Intel and driving the world’s largest chipmaker away from RDRAM.

Harold Hughes, president and chief executive officer of Rambus, said in an e-mailed statement that the outfit would appeal.

If Rambus had won it would have made a cool $3.95 billion in royalties. Antitrust charges would have automatically tripled this to $11.9 billion.

Shares in Rambus fell from $14 to $4. Investors said that with the court loss it becomes a lot harder for Rambus to make the huge profits that analysts had predicted.

Hynix Chief Executive Officer O.C. Kwon said he was relieved that the jury rejected Rambus’s claim that Hynix was to blame for the failure of Rambus’s proprietary RDRAM technology to become the standard for computer main memory.

Steve Appleton, Micron’s chairman and CEO was quoted by Business Week  as saying that the jury backed his company’s assertion that Micron acted in accordance with the law and went with its values of innovation and fair competition.

Other analysts have dubbed the verdict “extreme” and a complete shock to investors.

Daniel Berenbaum, an analyst with MKM Partner said that everyone had been talking about what would happen if there was a $500 million or $1 billion award, no one seemed to think they would actually lose.

The trial began in June, Rambus claimed that Micron and Hynix acted as a cartel to derail Intel’s 1996 decision to collaborate on RDRAM as a solution to a computer- memory bottleneck.

It claimed that the two outfits abused agreements made in the 1990s to manufacture RDRAM by inflating its price and suppressing availability. This caused Chipzilla to turn away from adopting and promoting Rambus memory as an industry standard.

But Hynix and Micron said that the Rambus-Intel relationship was stuffed up by Rambus being tossers. .

One Intel manager told the court that Rambus insisted that it have the right to block shipments of Intel processors that relied on the chip designer’s technology if certain conditions requiring Intel to promote RDRAM weren’t met.

For that reason, Intel could not be bothered supporting it.

Meanwhile Samsung must be kicking itself. It was named as a defendant in Rambus’s original complaint and ended up paying more than $900 million to end all legal claims with Rambus and reach a new licensing deal over computer-memory technology. Infineon was likewise removed from the antitrust case by paying $150 million to make the case go away. 

Chip sales see boost in September

Sales of semiconductors saw an increase during September, however the industry still noted a decline from the previous year according to Semiconductor Industry Association figures.

The latest stats from the SIA highlighted a 2.7 percent growth in September on a month by month basis. This means an increase from $25.1 billion in August to $25.8 billion.

America showed slow growth over the period, notching up just 0.7 percent increase in September.  Japan continued its improvements following the earthquake earlier this year, accounting for 4.2 percent growth over the month.  In Europe growth of 2.1 percent was recorded.

The SIA appears to be quite happy about the results calling it an “optimistic close” to the third quarter.  This is partly due to quarter-over-quarter increases of 2.1 percent, while year-to-date sales grew 2.2 percent.

Continued demand for mobile computing platforms such as tablets and e-readers helped push sales during September. 

The SIA was also positive about the economic situations in the US and Europe.  While economic uncertainty hampers “visibility for the remainder of the year” according to SIA president Brian Toohey, he believes that recent developments have given rise to more hope.

However it is not time to break out the champagne just yet.  While there were improvements seen from during the summer, the increase to September still represented a drop in sales from the same point last year.

Total sales were down by 1.7 percent from last year, with a sluggish Europe market noting a decrease of 3.1 percent.  The US meanwhile saw a 3.7 percent decrease, and Japan recorded a 9.3 percent downturn as it continues to recover from earthquake disruption.

The results follow a rather disappointing summer, so it is difficult to conclude that the September monthly increase is indicative of any major revival with a seasonal increase expected.  Indeed various semi firms have been posting some less than impressive results, with TSMC and Hynix both reporting poor financial developments recently.

 

September 2011

       

Billions

       

Month-to-Month Sales

       

Market

Last Month

Current Month

% Change

 

Americas

4.58

4.61

0.7%

 

Europe

3.07

3.13

2.1%

 

Japan

3.65

3.80

4.2%

 

Asia Pacific

13.78

14.22

3.2%

 

Total

25.08

25.76

2.7%

 
         

Year-to-Year Sales

       

Market

Last Year

Current Month

% Change

 

Americas

4.79

4.61

-3.7%

 

Europe

3.23

3.13

-3.1%

 

Japan

4.19

3.80

-9.3%

 

Asia Pacific

14.00

14.22

1.6%

 

Total

26.21

25.76

-1.7%

 
         

Three-Month-Moving Average Sales

       

Market

Apr / May / Jun

Jul / Aug / Sep

% Change

 

Americas

4.63

4.61

-0.4%

 

Europe

3.29

3.13

-4.7%

 

Japan

3.34

3.80

13.7%

 

Asia Pacific

13.98

14.22

1.7%

 

Total

25.24

25.76

2.1%