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The memory industry: Change continues

Posted: 06 Jan 2003 ?? ?Print Version ?Bookmark and Share

Keywords:memory? pc? dram? it? semiconductor industry?

Steve Appleton

CEO, Micron Technology

The memory industry continues to be one of the most volatile in the semiconductor industry. Yet, for those companies able to maintain their competitive advantages, there are rewards.

If we look back on the various memory cycles during the last 25 years, we find a couple of interesting trends. First, the consumption of memory bits has increased every year, showing steady growth. Second, upturns and downturns have been somewhat in balance, with downturns never lasting more than a year longer than previous upturns. These significant fluctuations have been primarily due to the volatility of pricing.

To survive in this volatile environment, memory companies must remain highly competitive. Keys to long-term survival include company's ability to maintain an efficient manufacturing model, sustain a strong financial position, and develop advanced technology. This is not easy. Ten years ago, there were about 15 companies developing DRAM technology. Today, there are only four - Micron, Samsung, Infineon, and Elpida. Eventually, the market will align around these four "technology camps."

Let us look at some of the factors influencing the memory market today. First, macroeconomic conditions and current geopolitical concerns continue to impact the confidence of the global business community. This is reflected in a current lack of corporate IT spending. Eventually, corporations will need to resume some level of IT spending. The questions are when and at what level, which brings us to the second factor influencing the memory market.

The industry is currently in a period of transition. Although there are geographic regions, particularly within Asia, that still boast strong growth in PC sales, generally, we are experiencing an overall leveling of growth in the computing segment. At the same time, we are seeing the emergence of diverse non-computing applications. The penetration of memory outside the computing space is growing. Not surprisingly, memory makes up about 75 percent of the silicon area in a PC. Looking outside the PC arena, you might be surprised to know that memory makes up about 40 percent of the silicon in an 802.11 switch, 45 percent in a cable modem, and over 60 percent in the latest generation cellphones.

There are challenges presented by this changing environment. These diverse high-tech products require distinct performance capabilities. Computing, consumer, networking, and communications products demand unique features ranging from low-power to high-bandwidth. This favors the technology developers that are able to continue investing and accelerate product development while advancing manufacturing technologies.

Going forward, industry analysts are cautiously optimistic about improved demand of memories this year or in 2004. Improvement is dependent upon many factors, including global economic and geopolitical conditions, a potential pick up in IT spending and emerging applications. Whatever the market brings, the companies emerging victorious will be those who develop technology and respond quickly and effectively to meet the complex demands of their customers. These companies will be able to capitalize on new opportunities of the changing technology landscape.





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