Samsung to double Rambus DRAM output within months

Samsung to double Rambus DRAM output within months
KIHEUNG, South Korea -- Samsung Electronics, which stopped ramping production of Direct Rambus DRAM chips a few months ago, plans to double its output of between now and February to meet strong demand from PC and server companies, the head of Samsung's semiconductor business said here today.

"Many customers came to us because not many companies can supply Rambus memories," said Yoon-Woo Lee, president and chief executive officer of Samsung's semiconductor unit. Although Samsung is building about 1 million 128/144-megabit Rambus chips per month, there is still a big market shortage of the devices, he said.

Samsung currently plans to ramp production to 2 million Rambus chips per month by February, Lee said during a wide-ranging interview here with U.S. journalists and analysts. Lee said he expects Rambus devices will make up about 20% of Samsung's DRAM revenue next year, even though he expects Rambus will account for only about 10% of the overall DRAM market.

Around 70% of Samsung's DRAM revenue next year will come from synchronous and EDO parts, including PC133, with the other 10% coming from DDR memories, Lee said, who believed that DDR would enter the market in the second half of 2000 for servers, and then pick up volume sharply. He believed DDR would start being used in desktop PCs and workstations in late 2000 or early 2001.

However, the tilt toward Rambus fits with Samsung's strategy of increasing revenue through product mix, said Victor De Dios, who heads the market research firm De Dios & Associates of Newark, Calif. "Almost nobody else is making Rambus because they knew Samsung was sitting on a lot of work-in-progress, and they were scared of a glut," he said.

The strategy could produce big dividends, as Rambus chips currently command a price premium of more than 50% over synchronous parts, said Hyung-Kyu Lim, executive vice president and general manager of Samsung's Memory Product and Technology Division. Samsung is developing small-size Direct RDRAM die at lower cost by reducing the number of memory banks on the chip from the current 32 to 16. Prototype 16-memory bank Direct Rambus chips at both 128- and 256-Mbit densities are expected to be sampled starting in June of 2000.

Rambus officials said the 32-bank design provides very fast data-access speed, but requires a larger die and costs more to put more complex logic functions on the chip. A DRDRAM Implementors Forum of leading memory firms was formed last fall to consider reducing the number of memory banks on the chip. However, Lee said Samsung is developing its 16-memory bank design on its own, outside the Implementors Forum.

Eventually, Lee said, Samsung hopes to come up with a 4-memory bank Direct Rambus design.

With only three weeks left in the year, Lee predicted that Samsung's semiconductor revenue in 1999 will be about $9.2 billion, compared to $5.9 billion in 1998. He said that "profit is tremendously improved" from last year. About $6 billion in revenue will come from memory devices, $1.1 billion from system LSI chips, and the remaining $2.2 billion from flat panel displays (see today's story).

Although the percentage representing system LSI chips remained flat for Samsung this year, it represents a victory because Samsung had sold its power device business -- which made up half of the company's non-memory chip sales -- to Fairchild Semiconductor earlier this year, said J.B. Kim, executive director of Samsung's semiconductor strategic planning team. Samsung is focusing on chip sets for cell phones and digital TV to grow its non-memory business.

The recovery in the DRAM market has helped Samsung considerably, but strong demand for flash chips and SRAM, particularly from cell phone manufacturers, also has boosted Samsung's fortunes this year, Lee said. Although he expects the DRAM market overall to cool somewhat in the first half of 2000, it should bounce back in the second half, and shortages will persist, according to Lee.

The United States is the largest regional market for Samsung's semiconductors, and accounts for 40% of sales. Europe is second-largest, at 20%, Lee said. -- Additional reporting by Jack Robertson