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Where memory vendors went wrong

Posted: 13 Apr 2009     Print Version  Bookmark and Share

Keywords:memory market  memory vendors  flash memory 

The memory market is in bad shape—we all know that. But how did it get so messy? Where did vendors go wrong?

In an event at the Embedded Systems Conference (ESC), Brian Harrison, president and CEO of flash memory specialist Numonyx, Inc., stated memory suppliers have made these four major mistakes during the current and bad cycle:

1. Over investment—Capital spending jumps during boom cycles, causing a glut during downturns. Another cause is "government subsidies, which affects supply and demand," Harrison said during a keynote at ESC this week.

(Mark LaPedus' comments: He did not give names, but Germany's Qimonda AG attempted to garner a government bailout. That failed. It is going under. Meanwhile, some Taiwan DRAM vendors are looking for a bailout. The island has formed a government-backed venture, dubbed Taiwan Memory Co., to absorb failed entities. But will it work? It's unclear, but the overall supply/demand picture remains bad in memories.)

2. Uncommitted—Memory players, including the big vendors, tend to chase after ''smaller niches'' during the bad times, Harrison said. Then, when the market turns, the big players ''exit'' that market, leaving customers in a lurch, he said.

(Mark LaPedus' comments: Spansion Inc., for example, exited the 5V embedded flash market, creating panic among automotive customers. Then, Numoynx has responded by re-entering that market.)

3. Unresponsive—The big players tend to ignore the low-mix markets and look for high-volume sectors, Harrison said.

(Mark LaPedus' comments: This leaves customers hanging and unable to garner a source of supply. See #2.)

4. Uninventive—The big players tend to ''move ahead'' with leading-edge technology, ''leaving (trailing-edge) technology behind,'' Harrison said. The smaller players can't keep up and devise ''me too'' solutions, he added.

(Mark LaPedus' comments: ''Me-too'' products create a capacity glut in bad times. Bottom line: Do memory vendors create any value at all?)

- Mark LaPedus
EE Times

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