DRAM at risk of shortfall in second half of 2010 -

The successful to date memory chip DRAM market could face some difficulties during the second half of the year leading to higher priced computers, iSuppli has warned.

The analyst company has said limited manufacturing equipment availability and challenges in process migrations could all drive prices of laptops and PCs as vendors will have to pay more for these chips and pass the costs on to the end user due to the lack of supply.

The company said DRAM is expected to ship 15.9 million 1Gbit-equivalent units in 2010, up 48.6 percent from 10.7 million units last year.

Mike Howard, senior analyst for DRAM at iSuppli, said: “Most of the year’s growth is forecasted to occur in the second half of the year, with each of the final two quarters of 2010 expected to post sequential bit growth of approximately 11 percent. In comparison, bit growth in the first two quarters of 2010 topped out at far below the 10 percent mark."

However, he warned that "such high levels of growth, concentrated in a six-month period, will strain the production capabilities of DRAM suppliers.”

iSuppli said there were two issues that could potentially have a negative impact on the second half of this years DRAM market and push the problem of undersupply. Firstly this includes
bottlenecks in the availability of tooling equipment. The company gave an example of how overall production remains a problem, referencing  the inability of ASML Holding N.V., the world’s largest supplier of semiconductor lithography tools, to supply enough equipment.

iSuppli also said there were challenges relating to immersion yield.

This is because  DRAM makers constantly work to make chips smaller so they can yield more chips from each silicon wafer. The technology to get ahead in DRAM takes time to master and a number of companies have run into problems because the technology is more difficult to implement as it gets smaller.

Currently, DRAM makers face problems using sub-50-nanometre technology, iSuppli said. Only a few chip makers, including Samsung and Hynix Semiconductor had successfully made the transition to the latest technology.

A company in the midst of transitioning is Japanese DRAM supplier Elpida Memory. It pointed out that for the second quarter, Elpida was expected to move from 6xnm processes to 45nm, which it explained was a considerable lithographic jump that presents confounding yield problems.

However it warned that should Elpida, along with its technology partner Rexchip Electronics, run into any unforeseen yield issues, bit production from both companies could be significantly disrupted.

As a result of both these issues iSuppli said that "overall bit growth projected for 2010 could come in from two to four percentage points lower than expected, slashing the projected annualised growth rate from 49 percent to as low as 45 percent."

Figures from analyst company  WSTS found that although NAND sales showed continuing strength in June, DRAM chips fell. It believed this was because retailers made less powerful PCs because of the rise in prices for DRAM.