DDR3 Interface Moves Closer

Phoenix, Arizona May 12, 2008 - Semico examines the strategic issues impacting the beleaguered DRAM market. DRAM vendors are announcing intentions to increase prices, except for the biggest vendor. DDR2 is still the highest volume product. New memory capacity is coming on line. Revenue is forecast to decline 20 percent in 2008. Units will grow by 9 percent and bit shipments will increase by more than 50 percent. But the really hot issue to end markets and the memory market is when will DDR3 move into volume production? Semico separates hype from reality in this report.

The aggregate average selling price (ASP) for DRAM dropped below the $2.00 level in 2007 and has not moved above that in 2008. Our assumption for the average price of DRAM is that the price decline of the first quarter begins to slow in the second half, but does not reverse its direction. We believe that the DRAM ASP remains close enough to the break-even point for DRAM manufacturers to remain in production. This is not necessarily the threshold at which companies will lose money, and increased efficiencies from 300mm fabs will continue to lower that threshold. The least efficient companies will feel that pressure more acutely than their competitors. Our view does not anticipate a reversal in the price decline for 2008, but rather a slowing of its rate. The second half sets up the market for a more prosperous 2009 with a double-digit revenue growth.

The 1Gbit becomes the density of choice in 2008 as the major vendors push to replace the 512Mbit as the high volume density. By second quarter the most bits shipped will be the 1Gbit. 1Gbit will be 29 percent of total units in 2Q08 and 42 percent of total units by 3Q08.

Semico continues to believe that it is clear that the memory manufacturers have enough manufacturing capacity to exceed the demand for DRAM. The question is how does the manufacturing capacity stack up against the combined demand for DRAM and NAND and how efficiently can manufacturers react to the changing conditions?

To purchase this study, or to receive a copy of the Table of Contents, including a list of tables and figures, please contact Susan Cadel at 607-368-7600 or susanc@semico.com and reference the VM101-08 or Market Challenges Abound as DRAM Price Decline Continues report.

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Technology manufacturers, vendors, service providers, technology professionals and market specialists worldwide, utilize Semico’s experienced staff and in-depth research to support critical business, product and technology decisions. Semico’s vision is derived from both an in-depth understanding of the technology and comprehensive research, which examines each segment of the supply chain for every significant market. Regular and ongoing end-user demand and primary research surveys are the foundation of the analyses, enabling Semico to provide insightful market analysis and guidance on future market opportunities.

Semico is a strategic partner with leading technology companies, with access to an extensive worldwide electronic network, technology databases and expert personnel. Semico was founded in 1995 by a group of semiconductor industry experts and has offices in Phoenix, California, New York, Japan and Taiwan.