DRAM market might hit turbulence

CHIP ANALYST OUTFIT Isuppli has warned that the high flying DRAM market might hit some turbulence during the second half of the year.

It thinks that memory supplies will tighten due to limited manufacturing equipment availability and challenges in process migrations.

The report by Mike Howard, senior analyst for DRAM at Isuppli said it expects chipmakers to ship 15.9 million 1Gbit-equivalent units in 2010. That will be up 48.6 percent from 10.7 million units last year.

He forecast that most of the year's growth will occur in the second half of the year, with each of the final two quarters expected to post sequential bit growth of approximately 11 per cent.

Isuppli predicts that such high levels of growth concentrated in a six-month period will strain the production capabilities of DRAM suppliers.

Howard said that bottlenecks in the availability of tooling equipment and challenges relating to immersion yield could affect supplies.

ASML, the world's largest supplier of semiconductor lithography tools, is having trouble keeping up with demand. While ASML appears capable of delivering an additional 33 immersion scanners this year, it will not be enough to resolve the bottleneck, Howard said.

A second-and potentially more serious-difficulty that could impact DRAM supply relates to yield challenges below 50nm, the point at which immersion tooling becomes necessary.

To be sure, the industry's biggest players-such as Korean giant Samsung, Hynix and Micron have successfully made the shift to smaller lithographies in light of their enormous resources and experience producing NAND flash memory, which is ahead of DRAM lithographically.

However, for resource-constrained companies or for those currently negotiating the transition, difficulties accompanying such a move might reduce their total output, negatively impacting the industry's overall bit growth in the process.

Winners would be the companies that already have leapfrogged the immersion hurdle such as Samsung and Micron. With their supply well secured, they can upgrade their prices, he warned. µ