Chip cos step up the NAND ‘arms race’
Lured by an ever-increasing demand for electronic gadgets, makers of NAND flash memory chips have stepped up a capacity race to outrun price falls and beat rivals, but the gamble may prove risky.
By Agencies |
SEOUL/TOKYO: Lured by an ever-increasing demand for electronic gadgets, makers of NAND flash memory chips have stepped up a capacity race to outrun price falls and beat rivals, but the gamble may prove risky.
Top memory chip players from South Korea and Japan have announced plans to raise their bets on NAND flash chips, widely used in portable electronic devices such as Apple Computer’s blockbuster iPod.
“The term, NAND arms race, is not an overstatement,” said Yoshihisa Toyosaki, president of Japanese consulting firm J-Star Global. “Neither Toshiba nor Samsung can afford to stop investing for fear that a price war will sap away profits.”
SanDisk and world No 2 NAND maker, Toshiba, said earlier this month they would invest some 600 bn yen ($5.2bn) in a new NAND plant, while South Korea’s Hynix Semiconductor, the third-biggest NAND maker, confirmed plans that it would invest $1.3bn in memory chip lines.
Market leader Samsung Electronics of South Korea has said it will invest $1 bn to build its 14th and 15th memory chip lines. The potential of the NAND market has also attracted new entrants such as Micron Technology’s joint venture with Intel, Germany’s Qimonda and Taiwan’s Powerchip Semiconductor.
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Massive investments are a prerequisite in the memory chip industry, where technological improvement is the one way to keep costs lower than the competition. But investing so much in NAND may prove costly, especially for new entrants, who can end up locked in a price war that will shred their profit margins. Market research firm iSuppli estimates NAND shipment to grow 192% this year, 181% in ’07, and 139% in ’08. But it also trimmed its annual NAND sales growth forecast to 17% from 37%.
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