Vendors to revive stalled NAND projects
Toshiba Corp. is moving forward with construction of a previously-delayed NAND flash fab in Yokkaichi, Japan, analysts expect other NAND vendors to follow suit taking advantage of favourable pricing conditions that have persisted for the past year.
"Prudent or not, it's a typical move during this kind of a time," said Jim Handy, a NAND and solid-state drive analyst at research firm Objective Analysis. Pointing to the history of the memory chip business, Handy noted that prolonged periods of stable pricing always induce vendors to add capacity to maximise profits until the industry reaches a state of overcapacity, at which point average selling prices drop.
During the height of the downturn, vendors cut capacity, shutting down older fabs. According to Christian Gregor Dieseldorff, an analyst who tracks fabs at the trade group SEMI, chip manufacturers cut installed capacity by 3 to 4 per cent last year. It was the first time capacity decreased in a given year since SEMI began tracking installed capacity in 1995, Dieseldorff said.
The overall installed capacity for memory vendors declined by 8 to 9 per cent last year, Dieseldorff said, though he added that this was mostly due to DRAM capacity reductions. He said he does not currently have a figure for capacity cuts specific to NAND memory vendors.
Toshiba, the world's No. 2 NAND vendor behind Samsung Electronics Co. Ltd, last week it would break ground in June on its Fab 5 in Yokkaichi on a site adjacent to its four other fabs there. Fab 5 was originally supposed to break ground in 2009, but Toshiba put the brakes on that plan in January 2009 amid the downturn.
According to Dieseldorff, Toshiba's Fab 3 is already fully ramped and its Fab 4 is projected to be ramped up by 2011. Toshiba needs to start construction on Fab 5 in order to have a new fab begin to ramp in the 2011-2012 timeframe, he said.
"Shrinking devices will not satisfy the continued and increasing demand for NAND. We need to build more mega-fabs," Dieseldorff said.
Another high-profile project delayed last year that both Handy and Dieseldorff expect will soon be moving forward is the IM Flash Technologies fab in Singapore. The shell of the fab was completed last year, but the joint venture between Intel Corp. and Micron Technology Inc. held off buying tools to equip the facility amid the downturn. Earlier this year, Daniel Amir, an analyst with Lazard Capital Markets, said his firm believes that the firms have moved ahead with ordering tools for the fab and that it is projected to ramp in 2011.
Other projects which were halted while in progress that Dieseldorff believes will move forward include Samsung's line 16, which already has some equipment, and Hynix Semiconductor Inc.'s M11 megafab in South Korea, which will be ramping phases, Dieseldorff said.
Handy said Hynix has been uncharacteristically mum on its plans for capacity expansion. With Micron's acquisition of Numonyx BV announced earlier this year, Hynix is likely to get additional capacity in the form of its joint venture with Numonyx in China, Handy said.
Handy noted that Samsung is also in the midst of a Rs.2,308.85 crore ($500 million) renovation on its fab in Austin, Texas. "This promises to be a NAND colossus once it's complete," he said.
Dieseldorff said Toshiba's Fab 5 stands out among new capacity because it is beginning from scratch. "We also know that Samsung had plans for a line 17 which we may see to begin in the near future, pending market conditions," he said. "Once the race for NAND continues, others may begin to jump on the train."
- Dylan McGrath
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