<b>DRAM Bulletin:</b> Intel faces DDR2 migration challenge

Based on Intel Corp.'s and the DRAM suppliers' strong showing of support for Double Data Rate 2 (DDR2) SDRAM at the Intel Developer Forum (IDF) in Spring 2003, one might have concluded that by the time Spring IDF 2004 rolled around, DDR2 would be everywhere. However, despite Intel's considerable push behind the next-generation DRAM technology, DDR2 is unlikely to establish a major presence in the market in 2004, iSuppli Corp. believes. And while Intel and the memory suppliers will continue to talk up DDR2 at Spring IDF 2004 next week, iSuppli doubts that any of the memory makers now are ready to ramp up cost-effective, volume production of the part.

Intel has done an admirable job of lining up support for DDR2. DDR2 parts from top DRAM suppliers including Samsung, Micron, Infineon and Hynix have been validated by Intel.

Micron Technology Inc., the second-largest DRAM supplier, so far appears to be leading the DDR2 charge, offering a diverse set of memory capacities ranging from 256-Mbit to 1G-bit. None of the Taiwanese DRAM suppliers have received Intel's DDR2 validation yet.

However, some other elements required for DDR2's success have yet to be put into place.

Intel's validation site doesn't display any system-level DRAM module validation results yet. Furthermore, most of Intel's DDR2 PC core logic chipsets won't be released until the second quarter. Historically, it has taken at least a year after Intel releases supporting chipsets for demand to cross over to a new type of DRAM.

Intel's motivation behind promoting DDR2 is to reduce the performance gap between its high-clock-speed microprocessors and the slower-performing memory subsystems. The company's drive to promote DDR2 is reminiscent of its earlier push behind Rambus Inc.'s Rambus DRAM (RDRAM).

From 1999 to 2002 Intel tried and failed to migrate the mainstream DRAM in the PC market from SDRAM to RDRAM. The company later shifted its support to DDR SDRAM, which was much more popular among the DRAM suppliers, as well as more cost effective.

The DDR2 transition will be much more difficult than the industry's previous migrations from Extended Data Out (EDO) to SDRAM, and from SDRAM to DDR, iSuppli believes.

Although the initial versions of Intel's DDR2 chipset are expected to support DDR as well as DDR2, changes must be made to motherboard designs to support the new core logic solutions. This could cause motherboard firms to be hesitant in making the required investments in DDR2 until they feel confident that demand is in place.

A similar phenomenon occurred with Intel's 845 chipset, introduced in 2002. The 845 supported both SDRAM and DDR SDRAM, but was not very successful in the market due to the complexity it brought to motherboard designs, as well as its support for only limited memory upgrade slots.

Spring IDF 2004 will present a perfect opportunity for Intel to address the issues facing DDR2 from a market perspective: and not just a technology standpoint. Winners in the DRAM game are always those players and technologies that offer the most benefit in terms of price per bit and cost per bit. Intel needs to discuss how DDR2 offers benefits based on those metrics.

Beyond DDR2, another major DRAM development to watch at Spring IDF 2004 will be how much progress Rambus has made on its XDR technology since the company's introduction of the product last year. XDR, Rambus' next-generation DRAM beyond RDRAM, so far has grabbed the attention of Samsung and Toshiba, with the companies expected to show off a 512-Mbit XDR DRAM at IDF. Rambus now is seeking Intel's endorsement to make it the mainstream PC memory of the future.

Rambus' XDR DRAM offers dramatically higher bandwidth than existing DDR technology. However, Rambus faces a challenge garnering support from DRAM suppliers, many of which have been engaged in legal disputes with the company over key DRAM patents. Rambus also faces a tough sell with Intel, which already has been down this bumpy road once with RDRAM.

From a performance perspective, XDR appears to have the capability to beat any future version of DDR technology. However, the DRAM market remains a price-per-bit and cost-per-bit game and it's unclear how XDR stacks up on these fronts. Could Rambus become a major factor in the PC DRAM market again? It's possible, but given the company's history, it won't be easy.

Nam Hyung Kim can be contacted at the following email address: nkim@isuppli.com