You'd probably have a better shot at turning a profit selling ice cubes to Eskimos than churning out DRAM chips at today's prices. That's less of an exaggeration than you might think, and to cope with continually falling prices, some DRAM makers have decided to scale back operations until chip prices bounce back up.
We've been extensively following the ups and downs (mostly downs) of the DRAM market, and that's one business we're glad we're not a part of. Back in late 2008, A-DATA chairman Simon Chen said the DRAM market was the worst it has been in 15 years, and things haven't gotten a whole lot better since then.
Making the best of a bad situation, Samsung in the third quarter of 2010 became the only Top 5 DRAM supplier to achieve revenue growth, positioning itself as the dominant chip maker, market research firm iSuppli said. Samsung sold $4.4 billion worth of DRAM in the third quarter, up 14.3 percent from $3.8 billion in the second. Here's how it breaks down for everyone else:
Hynix: $2.24 billion Q3/ $2.31 billion Q2
Elpida: 1.73 billion Q3 / $1.91 billion Q2
Micron: $1.12 billion Q3 / $1.14 billion Q2
Nanya: $439 million Q3 / $473 million Q2
"Samsung has been vocal about its desire to expand its DRAM market share to as high as 50 percent," said Mike Howard, senior analyst for iSuppli. "The third-quarter results show Samsung has put its money where its mouth is. By investing heavily in expanding product and advancing its manufacturing technology, the company has been able to cut pricing and to eat into the market share of its competitors."
Samsung increased its market share from 35.4 percent in Q2 to 40.7 percent in Q3 and is on track to reach its goal in 2011.
Following an extensive investigation into alleged price fixing violations, the European Commission found nine memory makers guilty of wrongdoing and fined them a collective $404 million.
The companies involved include Samsung, Infineon, Hynix, Elpida, NEC, Hitachi, Toshiba, Mitsubishi, and Nanya, all of which submitted settlements admitting their liability for infringement, according to reports. Micron would also have been included, but ultimately was not fined since it told the Commission about the cartel as far back as 2002.
"You may think that to use the word 'settlement' next to the word 'cartel' sounds quite strange," Almunia said. "So let me explain right away that we are not compromising on cartels, with or without a settlement. A cartel is the worst violation of competition rules since its object is to collude against the interests of other companies and of consumers."
Samsung received the biggest fine at $145.7 million, with Infineon receiving the second largest fine at $56.7 million. The cartel is said to have operated from July 1, 1998 and June 15, 2002.
The formation of the consolidated Taiwan Memory Company (TMC) faces a major setback today, as both Micron Technology and Nanya Technology, along with their joint venture Inotera memories, have pulled out of discussions to be part of the new group, DigiTimes reports.
For Micron's part, the company wasn't comfortable with the risk of its tecnology IP potentially leaking out if multiple patent holders began working under TMC. Micron stressed that its IP portfolio for specialty DRAM is more advanced than Elpida's, who is one of the participants.
Facing the worst DRAM market in 15 years, the Taiwanese government earlier this year announced the formation of the new DRAM company, TMC. The point of the new company was to consolidate memory companies and rescue its ailing DRAM makers. The government-led project is still in talks with various memory makers, including Winbond, who just yesterday confirmed it met with decision makers for TMC.
Micron, Nanya, and Inotera said they will continue to develop and improve their own partnership in preparation for competition from the new memory company.