DRam downturn hits US factories

Japanese giants Hitachi and Mitsubishi revealed last week they would shut down facilities in the US as the global drop in semiconductor sales took its toll.

Hitachi said in a statement it was making 650 staff redundant at a factory in Texas and announced it would merge its US semiconductor and microsystems business.

The manufacturer blamed the worldwide glut in DRam as the reason for the closure. Two months ago, rumours surfaced in Japan that Hitachi was to exit the DRam business in the early part of next year. Hitachi denied the rumours at the time.

Meanwhile, Mitsubishi also announced it would shut an assembly and test plant in Durham, North Carolina on the 6 November, with the loss of about 250 jobs.

The manufacturer also revealed that it would restructure its business in the US, merging its semiconductor unit with its electronic device group.

Mitsubishi said it had taken the action to ensure it remained competitive in the semiconductor market.

Rival Japanese DRam manufacturers Toshiba and NEC said they had no intentions of cutting back on their semiconductor production in the US.

Meanwhile, as part of research that bears out the developments at Hitachi and Mitsubishi, market research company Semico has forecast a continuing decline in the DRam market, with the only respite being a demand for higher density DIMMs.

Semico predicted that DRam revenues would decline by 19 per cent this year, amounting to $14 billion. But because of the lower average selling prices, the standard size of memory in a PC had increased.

The company added that the pressure on prices, coupled with over production, meant the number of players would decline. Dropouts would exceed entrants into the market, due to the high startup costs for DRam plants.

The other reason, Semico said, was that producing PC100-compliant modules required design and assembly expertise, as well as exacting performance test capabilities.

The report added that Samsung and Kingston Technology were number one and two respectively, in the worldwide market.

The research coincides with other marketing information that suggests any sweet spots to be found within the currently sour market conditions, will be in high performance synchronous DRam modules.