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Mem glitches have been healed, Infineon says

Posted: 03 Oct 2005     Print Version  Bookmark and Share

Keywords:infineon  dram  market  growth rate  pc 

Schaller: The development of DRAM prices strongly depends on the ratio of supply and demand in the market.

Price declines, technological lag and adverse exchange rates have pushed Infineon Technologies AG out of a leadership role in its core business—the memory market—during the past few months. Andreas Schaller, director at Infineon's Memory Products Business Group, sat down with EE Times to outline the necessary steps for his company to regain its position.

EE Times: There is a broad price decline everywhere you look in the DRAM market; some manufacturers have already reported negative results.

Andreas Schaller: What you said is correct. DRAM prices have fallen about 40 percent since the beginning of this year. Admittedly, prices have been stable since the end of March. But lately, we've seen a slight price upswing in the spot and contract markets.

What has caused the current fluctuation?

The development of DRAM prices strongly depends on the ratio of supply and demand in the market. The strongest quarter for DRAM is just before Christmas; after this, the demand normally slows down. We had a good DRAM market with steady prices in 2004, caused by a growth of memory capacities in PCs.

But more memory in every PC, combined with robust prices, means increasing PC manufacturing costs. Because PC makers also face strong competition, they are constantly forced to lower their costs. That resulted in a pressure to lower costs at the end of the year.

What will the future bring—in the short and medium term?

For 2005, most external market analysts expect a flat market volume. They talk about a price reduction of 30 percent compared with 2004. This will be in accordance with the historical average. At the same time, they expect increasing demand in memory capacity of about 50 percent. If you do the math, you get a nearly stable market level. Also, 2006 will be relatively robust, but with slightly declining revenues.

Does the digitalization of consumer electronics generate a big demand for memories?

The DRAM market is larger than ever before and there are a lot of new applications. There are several consumer trends, including MP3 players, digital cameras, DVD players, STBs, game consoles—but also communications applications such as PDAs or mobiles with office functionality. This opens up new opportunities for us. However, the main playing field is still the PC market, with about two-thirds of the market volume.

This market is interesting because it includes advanced, sophisticated products and high margins. If you look at the market structure, you will see that only the top four companies are able to compete in this business in a big way.

Principally, memory demand shows rapid growth in all consumer sectors. According to iSuppli, DVD recorders and VCRs will achieve an annual bit growth of 60 percent, DTVs of 94 percent and mobile phones of more than 100 percent by 2008. Compare it with the PC market, where memory demand has an annual growth of about 50 percent and, for entry-level servers, about 77 percent. We operate in all those segments, with our core business in the PC and server markets. At present, we are on our way to stronger diversification.

Has Infineon fallen behind in production technologies?

We had some problems with the introduction of the 110nm technology, but we caught up with the 90nm technology. We have begun volume production and migrated more than 5 percent of our capacity to 90nm. This means that we are clearly No. 2 in the DRAM market and that we have definitely reduced our lag behind the market leader [Samsung]. We had been behind more than six months; now we're only two to four months behind. Besides, we have already produced the first prototypes for the 70nm technology.

The 110nm delay was partly caused by the fact that we were the first company in the industry that migrated to 193nm lithography. This means that we have learned a lot, and that is a clear advantage now.

Above all, you must not forget that Infineon has a leading position in 300mm wafer production. We are the company with the world's largest 300mm capacity for DRAMs. We have our factory in Dresden that is also used for development purposes; we have Inotera Memories Inc., a production joint venture in Taiwan that is in the ramp-up phase by now; and we have our 300mm factory in Richmond, Virginia, where we have already produced the first wafers. The ramp-up in Richmond will start within the next months. Moreover, with our partner Semiconductor Manufacturing International Corp. (SMIC), we have had 300mm capacity in China for six months. And our partner Winbond is building a fifth 300mm factory. This facility should be running in the first half of 2006.

Where are you in flash?

Our market share is small because we just started producing nand-compatible flash products in 2004.

Currently, we have annual bit growth rates of 100-200 percent and 2005 will be another top-growth year. The downside is the price pressure: The end customers in the consumer market are very price-conscious, so the very high bit growth is accompanied by an annual price decline of 50 percent. Flash production may have some productivity reserves that are now activated. But in this market, you simply cannot rest on your laurels.

Where do you stand vis-a-vis the biggest players in flash?

Actually, there are only two important players in the NAND flash market: Samsung, with a market share of 60 percent, followed by Toshiba and Sandisk, which are production partners. There are a few more players as well. Most manufacturers use the floating-gate technology. This technique allows small structure widths, resulting in high productivity. But the patent situation could adversely affect the development of the market. Toshiba owns some patents that cover a lot of aspects, and if you are a manufacturer, this is a fact that you have to bear in mind.

That's why we decided to rely on a partnership with Saifun Semiconductors Ltd, using a different technology method based on Saifun's NROM technology. Together, we founded a joint venture called Infineon Technologies Flash. Meanwhile, we have taken over Saifun's shares, and now we operate the company solely.

We managed to enhance the NROM technology, originally used to produce EEPROMs and NOR flash, in such a way that we can now produce NAND-compatible memory that shows interesting process features. Today, our production runs with 170nm, but we plan to migrate to 110nm in the second half of the year. By 2007, we want to go directly to 70nm.

Currently, we are planning 2Gb and 4Gb, possibly even higher densities. A package often integrates several chips, especially when it comes to higher densities. That's why the market is kind of complex.

A year ago, Infineon announced progress in mram technology. What are you expecting in this area?

The search for a universal memory is like the quest for the Holy Grail. Memory has to be fast, non-volatile and shouldn't show any limits when it comes to its usability—this would be perfect. But in the real world, you cannot have everything, no matter which memory type you are working on.

A year ago, we presented a 16Mb MRAM prototype. If you are looking for a 'universal memory', MRAM is only one of several potential candidates that are now under development. At the same time, we are also looking at other memory technologies, especially phase-change RAM (PC-RAM) and conductive-bridging RAM (CB-RAM). To achieve a working volume production, all of these need a lot more innovation, and it is not certain that these technologies will be successful in the end.

- Christoph Hammerschmidt

EE Times





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