Powerchip to Cut DRAM Output by 50 Percent or More

Paul Lilly

Powerchip Technology announced plans to cut its total PC DRAM output in half, and perhaps even more. The move is intended to slow, stop, or even reverse the massive slide in revenues that were recorded in August, and in the meantime, Powerchip will look to other markets as it tries to increase its bottom line.

Current DRAM prices are devastatingly low and look to get even worse in the second half of 2011. Rather than ride out the storm, Powerchip said it plans to shift production over to non-DRAM parts for OEMs, such as LCD driver ICs, CMOS sensors, and power management chips, according to news and rumor site DigiTimes . Powerchip's 12-inch fabs are capable of cranking out 120,000 wafers a month. The company plans to drop DRAM production from 80,000 per month to 40,000, while kicking up non-DRAM production to above 50,000.

Powerchip isn't alone in this strategy. Nanya Technology recently said it would reduce output by 10 percent, and both Elpida Memory and Rexchip Electronics said they would scale things back as well. Some have been quick to throw around allegations of price fixing, though it should be noted these companies aren't colluding to drive up prices or to sell DRAM at a specific price point. They're simply trying to survive, and there's no guarantee all of them will. Back in November 2008, DRAMeXchange predicted DRAM makers would have to "reduce [output] or retire" to balance out supply and demand. Powerchip is choosing the former.

Image Credit: Powerchip

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