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DRAM A&T cautious due to DDR3 uncertainty

Posted: 28 Jun 2007     Print Version  Bookmark and Share

Keywords:DRAM assembling&testing houses  DRAM expansion  memory market 

The uncertainties in DDR3, shown by the price fall in 1H07 due to 2006 oversupply in DRAM, has made DRAM assembling & testing (A&T) houses cautious, revealed a new report from DRAMeXchange.

The 2006 oversupply in DRAM resulted in a price plummet in 1H07. DRAM ASP dipped almost 55 per cent y-on-y in Q2, leaving DRAM makers bleed from production cost. Take the latest Rs.69.47 ($1.70) DDR2 contract price for example, A&T accounted for over 30 per cent of total cost. Being exposed to such a severe cost situation, DRAM makers thus reduce chip testing time or ship directly in wafer forms in order to minimise their cost, which also results in a reduction of utilisation rate among A&T houses. Besides seeing lowering utilisation rate, A&T houses are also exposing to heavier price bargain pressure, as DRAM makers strive to suppress A&T cost to total cost within 20 per cent range.

The 2006 DRAM industry boom not only benefited chipmakers but also backend A&T houses. Bearing the lesson they learned from over expansion in 2000, A&T houses, though being cautious in mind, boosted their DRAM capex in accordance to DRAM makers' expansion plan. The semiconductor industry chain in Taiwan is comprehensive in terms of the supply chain. When DRAM makers expand, it spurs corresponding players to expand their backend production capacity. DRAMeXchange observed that total DDR2 A&T capacity (both wBGA andµBGA) reached 21.9 crore in Q2 from Taiwan, almost 40 per cent to global market share. 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 gain at 45 per cent.

Severe price pressure on DDR2 and the uncertainty about DDR3 are also holding off A&T houses' expansion. Some DRAM makers choose to use the present wBGA but some are considering adoptingµBGA due to reliability and performance concerns. Some are also considering to adopt wafer level chip-scale packaging, to save costs by including lead frame and other components. Flip-Chip is also an alternative for DDR3 due to its good conductive nature, small size, good heat dissipation and high performance, but the cost is the barrier.

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