MUNICH, Germany Memory maker Qimonda saw its sales precipitate during the past quarter. At the company's shareholders annual meeting in Munich, Qimonda CEO Kin Wah Loh gave a cautiously optimistic forecast, betting on consumer electronics to replace the PC market as main demand driver.
In his speech to shareholders, Loh stated that during the past year the average selling price for DRAM mainstream products declined by almost 80 percent, which was the most significant reason for the company's sales deterioration – by the way, in lockstep with other memory makers. In the December quarter alone, prices fell by more than 40 percent, Loh said. "This was one of the most severe declines in the history of the DRAM industry."
According to Loh's analysis, the reason for the dramatic price drop was oversupply, caused by increased investments in DRAM manufacturing across the industry, productivity improvements and the decision to convert NAND Flash production to DRAM production (as was the case at Qimonda). Loh estimated that the global DRAM production grew more than 80 percent in calendar year 2007 in 'normal' years it grows about 50 percent.
Nevertheless, Loh believes that the DRAM market will continue to be a growth market during the years ahead. For classical PC DRAM products, Loh hopes for the introduction of the Windows Vista service pack 2 as well as increased corporate PC replacement spending. He said he estimates that over the current year, the average PC memory content will grow by 40 to 50 percent to about 2.3 Gigabyte.
As main growth driver however, Loh identified applications beyond the 'classical' PC DRAM business. For instance, 3G handsets, game handhelds and portable GPS systems are among the top 5 growth drivers, Loh said. The manager reiterated his strategy to focus on these markets and pointed out that the company already achieved more than 50 percent of its sales with non-PC memory products.
Another pillar in Loh's strategy is cutting costs. In part, this will be achieved by increasing productivity through technology conversion. Important productivity drivers in the semiconductor industry are chip geometries and wafer size. Loh admitted that Qimonda has to catch up with the market in terms of geometry. Anyhow, the company has accelerated its conversion to 80nm and 75nm technologies. For the September quarter, Loh has scheduled the introduction of the next generation 58nm technology. "We are on track with our conversion plan and already achieved more than 50 percent capacity conversion to 80nm and 75nm at the end of December," he said.