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DRAM assembly and test houses cautious on expansion

Posted: 28 Jun 2007 ?? ?Print Version ?Bookmark and Share

Keywords:DRAM? assembly & test? A&T houses? expansion plans?

Although DRAM assembly and test (A&T) houses traditionally follow DRAM makers' expansion moves, DRAMeXchange reported they are taking a cautious stance this year following last year's over expansion, which resulted in a severe DRAM price fall in the first half of 2007. Uncertainties in DD3 prospects likewise keep A&T houses' expansion plans at bay.

DRAM ASP dipped almost 55 percent y-on-y in Q2 2007, leaving DRAM makers bleeding from steep production costs. In the latest $1.70 DDR2 contract price for example, A&T accounted for over 30 percent of this cost. Exposed to critical cost pressure, DRAM makers reduce chip testing time or ship directly in wafer form in order to minimize cost, which in turn results in a reduction of utlization rate among A&T houses. Besides the low usage rate, A&T houses also face heavier price bargain pressure, as DRAM makers strive to suppress A&T cost to within 20 percent of total cost.

The Taiwan semiconductor industry has a comprehensive supply chain. When DRAM makers expand, it spurs a corresponding expansion among backend players. DRAMeXchange observed that total DDR2 A&T capacity (both wBGA and ?BGA) reached 219 million in Q2 from Taiwan, almost 40 percent of the global market. While Korean DRAM makers are mostly having their DRAM A&T done in-house, expansion among Taiwan chipmakers still encourage A&T houses to expand. DRAMeXchange projects that total DDR2 A&T capacity will grow considerably, resulting in a more than double market share at 45 percent.

However, severe price pressure on DDR2 and the uncertain DDR3 prospects are holding off A&T houses' expansion.

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