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Toshiba Latest Casualty of DRAM Price Wars

Posted by ryuzaki0 on from the might-be-a-good-time-to-buy-memory dept.

Tsar writes: "ITWorld.com tells the story: Toshiba is getting out of the DRAM business. They had 6.2% of the world market last year, but soon their Manassas, VA facilities will belong to Micron, the Yokkaichi plant's DRAM production will be reduced to a trickle, and Toshiba will be out of the commodity memory market. Guess you can sell DRAM for a hundred bucks a gigabyte, but you can't make a living at it yet."

10 of 117 comments (clear)

  1. Cost of entry protecting them? by Sobrique · · Score: 2, Interesting

    It looks like companies really are finding out the hard way, that just because a market is really expensive to enter
    (A 'chip' factory is definitely one of the most expensive things you can build) that hasn't prevented savage competition when it was profitable.
    Then the market saturates, and people stop buying. Prices crash, and that really expensive factory you bought is a white elephant.

    Course, that doesn't stop me feeling all enthusiastic about 4Gb of RAM in a desktop :)

  2. Who didn't see this coming? by Andorion · · Score: 4, Interesting

    Toshiba didn't have much going on in the ram market for a while now...

    Check out the toshiba pieces up on pricewatch to see what I mean.

    Wonder when we're going to see the DRAM market bottom out.... soon as enough people drop out of it I guess.

    -Berj

  3. If you were smart... and other stuff by Anonymous Coward · · Score: 1, Interesting

    Well.. its not like the fabs are closing. They are just being sold off. Big deal. And if anyone knew what was good for them, they would buy a shitload of ram while its cheap. The price WILL go back up. It always does. Its kinda like gold, but only more useful.

  4. DRAM Schme-RAM by CaptainAlbert · · Score: 5, Interesting

    DRAM is a funny product. Market analysis is harder because the demand for it is not governed by your "ordinary" factors. For a start, it doesn't wear out half as fast as you might expect (particularly if you compare its failure rate to the average lifetime of a home PC). Demand in recent years has been similar to that for mobile handsets - the technology matures and people want it... until they *have* it, then they don't need any more.

    If you imagine that every household didn't have an electric jug kettle, and someone suddenly invented it and sold it at an affordable price... well you get the idea.

    DRAM is in over-supply because it's one of the only silicon products which has a huge domestic market. My company makes telecoms base-station hardware, and we have next to no DRAM on our boards - it's all SRAM and fast DPRAM embedded in ASICs. The demand for *those* is easier to analyse because the market is steadier and less "faddy".

    Shame they couldn't put the plants they're closing to better use though... it's not like there aren't more exciting designs around the corner waiting to be spun...

    --
    These sigs are more interesting tha
    1. Re:DRAM Schme-RAM by seanadams.com · · Score: 4, Interesting

      we have next to no DRAM on our boards - it's all SRAM and fast DPRAM

      I'm very curious - do you have any idea what you're paying for SRAM? My company is paying $3.00 a pop for 128KB standard 60ns SRAMs, and it seems incredibly high in light of the plummeting DRAM prices. In fact SRAM prices don't seem to have budged in the last year.

    2. Re:DRAM Schme-RAM by CaptainAlbert · · Score: 4, Interesting

      > I'm having a hard time understanding what you've written!

      <re-reads own post> hmm... so am I :-) Lack of coffee, I think.

      I don't think I meant it was "hard to understand", I think I meant it was more fickle and quite unlike a lot of other silicon markets. Most chips and circuit boards are never sold directly to the general public; they're designed, manufactured and purchased by the various companies who manufacture hardware for end-users. Thus, applying the same analysis that you might use when considering, say, high speed digital-to-analogue converters, might yield some phoney results.

      The PC (and related components) market is different from the washing machine market, because people expect the product they buy to be obsolete within a year, and worthless within three. That's not because it will break down, but because of the speed at which the technological developments are progressing. I guess that was true when the washing machine was first invented, too.

      All I was saying was that for some reason, a lot of investors and analysts have assumed without any solid justification that the growth curve in sales of DRAM/mobile phones/PCs/etc. can be extrapolated skywards without any consideration of external factors.

      Because the market trends are not quite the same as that for any other products, I think there were lots of mistakes ready to be made. If only 64KB *had* been enough for everyone :-)

      --
      These sigs are more interesting tha
  5. memory prices by Anonymous Coward · · Score: 1, Interesting

    Sorry about the AC bit I am a long time reader but don't comment much...

    I used to work for one of the biggest wafer companies in the world (MEMC) I got laid off in March when everything went to hell. I'm suprised it took this long for the chip companies to start feeling the pressure. We kept hearing it was a temporary setback and they has to clear out some old inventory. Well since our company is just about cleared out of 'old inventoy' I'm not suprised the upper steps of the ladder aren't feeling some pain,

  6. Micron not doing so hot either by nyquist_theorem · · Score: 4, Interesting

    According to this story Micron's not exactly picking the money trees either.

    One interesting tidbit from that article to give you an idea just how much the DRAM market has turned - Micron recorded a record $625-million loss for its entire 2001 fiscal year, which came after a record $1.5 billion profit in fiscal 2000.

    So I wonder if it's not that Toshiba wasn't doing ok (relatively speaking) but rather that they didn't have the pockets (or desire) to hang in there to watch it turn back (as one would expect it to in time).

    --
    -- "Ignorance more frequently begets confidence than does knowledge." (Charles Darwin)
  7. Re:Oh read the article slashie... by mgblst · · Score: 2, Interesting

    Why will it be profitable for micron, but not for toshiba? Its the same plant, i cant imagina micron introducing that many cost cutting measures. Were toshiba just being too greedy?

  8. Simple Economics by thebigwaffle · · Score: 4, Interesting

    "Toshiba is not alone in wanting to exit the **commodity** DRAM market. Earlier this year NEC Corp. said it would end DRAM production by 2004 and transfer all operations to Elpida Memory Inc., a joint venture formed with Hitachi Ltd. to insulate the two companies from the cyclical swings of the market."
    //emphasis mine

    Well, there you have it; a perfect example of classical economics. Whenever you have a particular market where profits are above normal (excess earnings after you pay your overhead), competitors will enter the market place. As more competitors make more product, the supply of the product increases (shifts the supply curve right, for all you Econ buffs) and pushes prices down. That's all and dandy but it doesn't last forever. Because prices are pushed down (and profits back to normal or below), competitors/entrepreneurs/Toshiba will exit. It makes sense. Why stick around?

    Be careful folks. As this model suggests, as supply decreases, the price will rise. Exiting an industry preludes price increase; it's inevitable.