DRAM fabs make more production cuts

DRAM MAKERS Nanya and Inotera have announced major production cuts. These follow similar announcements from their business rivals PSC, Elpida, Hynix, and ProMOS.

For Nanya, this will mean delaying expansion plans for both Mei-ya and Fab 3 Phase 2. The company's Fab 3 Phase 1 project will also cut production by half. The outfit is transferring its Fab 3 Phase 1 system to Micron’s stacked process.

Inotera has cut production by 20 per cent.

According to analysts at DRAM Exchange this means that, together with announcements from other DRAM makers total worldwide, production will be cut by 12-13 per cent.

Despite all these production cuts the spot price for DDR2 1Gb eTT declined another 3.8 per cent last week.

This was mostly because of market pessimism which happened when Samsung announced its revenue for memory has slipped.

DDR2 667 1Gb declined from US$1.06 to US$0.99, which is a 6.6 per cent decline.

DRAM Exchange said that with the continuing fall in DRAM price, cutting production was going to increase the price, however it was more likely being a tool to conserve cash in order to survive.

It also said that the tried and tested method of cutting costs and raising competitiveness by using new technology was also not going to work this time. The cost of DDR2 1Gb using 70nm process is roughly US$1.9 if upgrade to 6Xnm.

Even if DRAM makers use 5Xnm, the average cost will be around US$1.4 while current DRAM die price is roughly US$1.0. µ