A Closer Look
Boise, Idaho -- It turns out that Micron Technology's vow to sell DDR modules at parity with single data rate SDRAM DIMMS was a "campaign promise."
When double data rate chips suddenly became scarce and DDR started selling at a nice premium over SDRAM, guess who is no longer selling at parity?
Mike Siebert, Micron vice president of sales, conceded that Micron is now selling DDR at a premium -- "although it's not much of a differential," he maintained. Still a premium is a premium, and parity is parity.
OEMs and DRAM buyers loved Micron when the feisty U.S. memory maker started out selling its DDR modules at parity with SDRAM DIMMs. Initially most competitors were forced to do likewise, or at least shave the premium they would otherwise have charged on a new chip just ramping up in its early life cycle.
Then a funny thing happened on the way to the Intel Pentium 4 Forum. The processor goliath started shipping its new 845D Brookdale chipsets supporting DDR three months earlier than expected to module vendors, board makers and PC OEMs. All to have an abundant supply of Pentium 4 DDR-supported PCs ready tosell the minute Intel lifted the 845D Brookdale floodgate early in January.
Actually this could have been divined early in the game, but apparently many in the channel were misled by Intel's adamant public stance that DDR P4 wouldn't launch until Q1 '02. Or maybe the PC industry did know they would need to load up on 845D chipsets and DDR modules in the fourth quarter to be ready at the gate, and the memory chip makers guessed wrong.
It still takes three months to fabricate any DRAM and last summer many chip makers, overcome by the market tumult, simply didn't start sending enough DDR wafers down the line to be ready for the escalating demand right now.
Some DRAM producers have the ability to make mask step changes in the middle of the three-month process to switch from single data rate chips going down the line to make them DDR. Even so the number of DDR chips and modules now reaching the market is falling a little short of demand, and viola!-- the price goes up.
Siebert conceded that Micron doesn't have the option of mid-process switch to DDR. Wafers started down the line three months ago were tagged at that time to end up as either SDRAM or DDR chips. "We simply didn't anticipate the growing demand in the fourth quarter for DDR to get ready for the Intel launch," he admitted.
The DDR premium -- variously estimated at 15%-to-20% -- is a refreshing relief for producers selling workhorse single data rate SDRAMs at a big loss. Contrawise, it's a bother to buyers who would prefer to launch their own P4 DDR PCs at the most attractive price possible.
Not to worry. Siebert and other DRAM vendors expect the DDR tightness to be momentary. Producers are expected to adjust quickly and depending on how fast Intel DDR-supported PCs take off in the market, the DDR supply is likely to meet, or even exceed, demand.
It costs just about the same for chip makers to produce a DDR chip as a SDRAM version. A DDR module costs insignificantly more. So when DDR hits its stride at 50% of the total DRAM market by the end of next year, there's every cost reason why double data rate should once again sell at parity.
And by 2003 when DDR becomes dominant and the single data rate market share falls off, SDRAM may actually start to show signs of selling at a premium. Now that's a switch.