Chip makers rush to next-generation DRAM

Several of the world's top Korean and Japanese chip makers are accelerating their move to 64Mbit memory chips.

Hoping to stem the damage to revenues from falling prices for dynamic RAM, several of the world's top Korean and Japanese chip makers are accelerating their move to 64Mbit memory chips. They're looking for higher profit margins, but what they find might be a repeat of the current situation: too many chips, leading to a decline in prices.

NEC by March of next year is planning to push its 64Mbit production to 1 million units a month, a level that Fujitsu expects to match some time next year, officials say.

South Korea's Samsung, meanwhile, will double its current output of the chips to 500,000 per month by the end of this year, according to press reports. A spokeswoman for Samsung could not comment on specific production plans but says the company is shifting from 16Mbit to 64Mbit DRAMs roughly six months ahead of schedule.

The accelerated production of the 64Mbit chips will far surpass the worldwide demand for those chips, which IDC Japan expects to hit between hit between 50 million and 60 million units in 1997. The quicker shift to the next-generation DRAMs stems from a severe oversupply of today's standard 16Mbit DRAMs, which have lost much of their value in recent months. That oversupply has forced chip makers to cut back on production of the 16Mbit chips, or at least to slow their expansion plans for the chips.

The move should mean that PC users will continue to enjoy cheap memory, analysts say. "It's difficult to say, but I believe in the first half of next year the 64Mbit supply and demand will be unbalanced. Oversupply will come, prices will go down," says Akira Minamikawa, senior analyst at IDC Japan.

The falling prices of 64Mbit chips, coupled with continued rock-bottom prices of 16Mbit units, should raise the standard memory of PCs from 16Mb today to 32Mb next year, analysts says. DRAM is used as the main memory in PCs, workstations and a growing number of electronic devices.

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