DRAM companies speed up investment to meet DDR2 demand

Realizing the increasingly important role to be played by DDR2 memory, DRAM makers plan to quicken the pace of capital investment for production of the new generation of double data rate chips. Mainly driven by pacesetter Intel and PC OEMs (original equipment manufacturers), demand for DDR2 will quickly rise to 70% on the overall DRAM market before the end of 2004, DRAM makers now estimate.

Intel had earlier projected that the DDR2 demand would account for about 30% of the DRAM market by the end of next year, sources said. The primary concern of the DRAM companies is no longer when DDR400 will become the mainstream of the market, but rather the growing demand for DDR2. Intel has made it clear to include DDR2 in its product roadmap, sending a signal to the leading DRAM and PC OEM makers around the world about the future trend. The strong and concerted support from Intel and the PC brand vendors will make it much faster to switch from DDR to DDR2 than the earlier conversion from SDRAM to DDR, when Intel favored Rambus DRAM (RDRAM) over DDR, according to executives of DRAM suppliers.

To catch the forthcoming market boom, DRAM makers are speeding up capital investment. But they will face greater obstacles than before because the materials and manufacturing process for DDR2 are entirely different from those for DDR. Taiwan-based Nanya Technology aims to repeat its success in getting a head start in the DDR market. The company plans to inject US$300 million to upgrade its 0.14-micron production process to 0.11-micron. As much as 85% of its production capacity could be allocated for DDR2 output. But some DRAM makers cautioned that they could also face problems in packaging and testing if they want to enter mass production of DDR2 products. Packaging and testing companies have lagged in making new investments in the past few months to keep up with the pace, they explained.

News source: DigiTimes

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