To bear the spiraling cost of developing DRAMs – and falling prices – former competitors are being driven into new partnerships that are likely to change to face of the semiconductor industry in the long term. Yesterday, Japanese giants NEC Corp and Hitachi Ltd – with 11% and 6% of the world DRAM market, respectively – agreed to get together in a new venture that will share the cost of developing new DRAM chips. The two currently spend some $410m annually and hope that through their partnership they can grab 20% of the market. They also hope it will help their ailing semiconductor divisions, victims of the worldwide slump in prices and competition. Analysts expect this venture will be the one DRAM venture to survive in Japan. NEC’s new president Koji Nishigaki told Reuters earlier this year that it would avoid big ticket investments in DRAM production.
Last month, Korea’s Hyundai Electronics Industries Co and LG Semicon Co finally concluded an agreement to merge DRAM memory chip operations, creating the world’s largest DRAM manufacturer, just ahead of current leader Samsung Electric Co, which has a 20% market share. In Japan, Fujitsu Ltd and Toshiba Corp have already teamed to develop one-gigabit DRAMs by 2002 while others are outsourcing manufacturing to Taiwanese companies. Toshiba is expected to increase its investment in the Taiwanese semiconductor industry later this year. It has already contracted Worldwide Semiconductor Manufacturing Corp for logic, SDRAM and flash memory technology.
