OEMs are faced with an increasingly complex and fragmented DRAM market, as additional flavors sporting different architectures and price structures fly off suppliers' fab lines.
Also, the PC industry, long the major consumer of DRAM, shows no major signs of emerging from its malaise, pushing suppliers to seek other, more promising avenues such as cellular handsets, PDAs, and digital cameras and raising questions of whether there will be sufficient capacity for all customers, especially if the PC segment springs back to life.
Desktop PCs, notebooks, and servers are expected as in years past to continue to account for roughly 80% of all DRAM units shipped, according to Semico Research Corp., Phoenix. Measured in terms of bits per sector, computing's share is not projected to decrease the next few years, despite the expected slow to flat growth of the PC market. PC and server OEMs will stack more and more bits of DRAM to boost performance as new fab processes offer higher yields and lower per-bit cost. And while demand for DRAM from other markets such as mobile phones, PDAs, and digital cameras is likely to expand at a healthy rate, none will come close to matching the PC sector's thirst for more and more memory, according to Semico.
That means electronics manufacturers outside the computing sector will still have to attune their DRAM procurement activities to how PC and server OEMs tend to shape the market.
"We have been talking a lot with OEMs about how to get DRAM suppliers to understand that the PC market and other DRAM-consuming markets are different and have different needs," said Victor deDios, an analyst with deDios and Associates, Newark, Calif. "Too often suppliers are almost solely focused on PCs and the rest are left behind."
Said Jim Elliott, senior product marketing manager for DRAM at Samsung Semiconductor Inc. in San Jose, "I make sure that our non-PC customers are apprised of what the price sweet spot for a particular type of DRAM is going to be in terms of what the electronic data processing PC, workstation, notebook, and server market is doing. You have these different variables, such as power consumption and speed, that are constantly changing, and if you're outside the demand bell curve on any one of these, you can be stuck paying a lot of money for a part."
The DRAM standards body, JEDEC, has traditionally catered mainly to the needs of PC OEMs. But in the past five years or so, JEDEC has begun to address the needs of DRAM buyers outside the PC industry. Following the initiative of Cisco Systems Inc., which offered in 1998 to contribute to the creation of memory standards that would meet the requirements of communications switching and routing applications, a number of other non-PC OEMs have begun to do the same.
"The development of DDRII was inclusive of all the various industries," said Joe Macri, director of technology at ATI Technologies Inc., Markham, Ontario, who is also chairman of one of the JEDEC committees. "We saw Cisco come in, we had game console and consumer products players come in, we had representatives from all the various industries. DRAM covers an enormous amount of markets."
Paying more attention
Suppliers, too, claim they are lending more of an ear to their non-PC customers, especially as the computing market continues to stagnate. And as DRAM vendors work with their largest PC customers to create added value by tweaking their designs, non-PC OEMs also stand to benefit from the more highly developed, higher-performing architectures, according to industry observers.
Micron Technology Inc., one of the world's leading DRAM makers, sees strong growth potential in the mobile phone market.
"We're starting to note demand for, and the emergence of, diverse noncomputing applications," said Mike Sadler, vice president of worldwide sales for Micron in Boise, Idaho. "A handset now consumes approximately 64Mbits of memory, and current projections by research firm iSuppli indicate additional handset bandwidth and performance requirements will increase the average megabits of memory consumed in handsets to 256Mbits by 2007."
"There are many different sectors now, and many opportunities. There are growth markets out there, as well as specialty markets such as PDAs, and they are attractive for us," said Andreas Schaller, senior manager of business planning and projects for the memory products group at Infineon Technologies A.G., Munich, Germany.
"We expect the PC market to be the slowest-growing, while mobile applications require a lot of memory. That's where we see the main growth coming from, even if from a market-share standpoint mobile applications will still only represent 5% to 10%."
Meanwhile, the flavors of DRAM widely available to PC and non-PC OEMs alike continue to proliferate. Considered the leading-edge memory just two years ago, synchronous DRAM (SDRAM) is quickly being edged out. The pace of the transition from single-data-rate (SDR) SDRAM to double-data-rate (DDR) RAM quickened during the last half of 2002, to the extent that DDR is already reaching maturity while SDR SDRAM production is decreasing.
DDR, which doubles the rate at which read and write functions are performed, will account for the majority of DRAM unit sales before the end of the year, according to analysts. But DDR comes in several flavors and speed grades, adding to the range of possibilities from which OEM buyers must make the most sensible choice as they weigh factors like performance and cost.
"DDR is now obviously the dominant memory type, but it has some subtleties that alter the market's dynamics," said Semico analyst Matt Godfrey. "While DDR at 266MHz has reached saturation and pricing is on the decline, DDR333 and DDR400 command a premium. These are high-end memories that achieve faster speeds and are priced higher than standard."
But fairly quickly, DDR333 and DDR400 will also achieve market saturation, with DDR333 prices already beginning to show signs of declining, Godfrey said.
"Chipset support is one of the main determinants behind the adoption of memory types, with Intel's Canterwood and Springdale chipsets supporting single- and dual-channel DDR 333 and DDR400," he added. "And this will make these speeds the standard memory in all applications in the forthcoming period."
While DDR in its various forms proliferates, production of lower-performing SDRAM is decreasing. According to Samsung Semiconductor, this reduction could cause SDRAM prices to increase by as much as 50%.
However, Semico forecasts that companies like Micron and Korea's Hynix Semiconductor Inc. will still be able to provide enough SDRAM, at least in the short run, to prevent prices from rising that high.
Nevertheless, Semico's Godfrey warns that given the fact that OEMs have enjoyed a decided buying advantage the last couple of years, "DRAM makers will pounce on every opportunity to increase prices that they can. That means OEMs should look to initiate some long-term pricing agreements before DRAM vendors take advantage of any turning of the tables."
But adding to the challenges confronting OEMs is determining DRAM demand trends. What type of DRAM will become the mainstream memory, and when?
"If someone is thinking in regard to their product launch for next year that DDRII is going to be the mainstream memory, but low and behold DDRII ends up being three times the price of DDR, they are going to be at a competitive disadvantage," said Samsung's Elliott.
"So if you miscalculate the timing of what's happening, and the market doesn't adopt the new technology or speed grade, you can get stuck at the bleeding edge of that price curve."
Yet another concern of OEMs and in particular small-volume, non-PC manufacturers is whether DRAM suppliers will have sufficient capacity to meet their unique memory needs if the PC market improves and the large PC OEMs require much more memory.
"Availability is still an issue," said Mike Pangione, operations manager at Technical Support Inc. in Rockaway, N.J., which makes systems for IT infrastructures.
"If I'm looking at quotes for 50 systems orders and I don't see the particular DRAM that I need is there, I have to go get quotes on something else," he said. "Flexibility is key these days: you can't rely on any one product; if you do, you can end up in trouble."
An executive at one small manufacturer, however, expressed confidence that the days of DRAM makers shutting off the supply tap for lower-volume customers in favor of larger-volume contracts are over.
"The whole DRAM industry has become just-in-time, and capacity is not a problem now, nor do I see problems in the future," said Charles Shao, president of Einux Inc. in City of Industry, Calif., which builds server platforms.
"There is enough capacity out there for years, what with all the new fabs coming on-stream; it's just a matter of turning on the faucet," Shao said.
The current practice of stacking DRAM chips will also help ward off a return to the dark days of 2000, when some companies were forced to curtail or cease shipments because they lacked memory supply, he said. "After 2000, which was a problem year, it became possible to stack chips up to 1Gbit, when DDR became prevalent," Shao said. Before that, adding memory essentially required starting from scratch by removing existing memory before upgrades could be made, multiplying the amount of total bits required, he said.
OEMs are also likely to benefit from no longer having to compete for capacity with high-end Intel chipsets using Rambus memory. Following its decision to cease its support of RDRAM after years of backing the technology, the world's largest CPU supplier is now adopting JEDEC-standard memory.
Rambus Inc., however, plans to forge ahead with new memory architectures for specialty server and workstation applications. There is nothing geared in the foreseeable future for PC applications, according to the Los Altos, Calif., company, but it expects its memory to remain a mainstay in Sony Corp.'s Playstation console.
On the edge
Analysts and industry observers expect makers of PC graphics processors to continue to play a cutting-edge role by incorporating the new types of DRAM into their chipsets.
"Graphics chip suppliers have to worry about what JEDEC is doing only in regard to ensuring their OEM customers that there will be multiple sources and therefore competitive prices for the memory they choose to use," said Jon Peddie, an analyst at Jon Peddie Research, Tiburon, Calif. "Sometimes for their top-end devices and to gain bandwidth performance, they will take a chance and use a part that isn't yet JEDEC-stamped but which JEDEC has demonstrated a strong interest in, and/or approval is imminent."
This year, ATI Technologies and Nvidia Corp., the world's' two leading PC graphics chipset suppliers, took the wraps off new memory for which JEDEC has yet to okay a standard.
Nvidia, Santa Clara, Calif., launched its GeForce FX graphics card, offering what it touted as the first consumer application for 1GHz DDRII. Soon after, ATI, Thornhill, Ontario, debuted its Radeon 9800 DirectX 9 VPU with DDRII.
Currently, Hynix, Micron, and Samsung are developing graphics DDRII (GDDRII) memory prior to JEDEC signing off on a GDDRII standard, which is scheduled for later this summer. And later this year, well before GDDRII achieves widescale application, Hynix, Micron, Infineon, and Samsung, along with Japan's Elpida Memory Inc., say they will begin sampling GDDRIII.
According to Micron, instead of the 2n-prefetch used with DDR, GDDRIII will offer a 4n-prefetch rate that transfers four data bits every two clock cycles at the I/O pins. A read or write access for GDDRIII will consist of a single, 4n-bit-wide data transfer at the internal DRAM core.
The 4n-prefetch will therefore enable the internal data bus to be four times the width of the external data bus, and enable the external data transfer rate to be four times the internal column cycle time.