China tries to grow its own DRAM industry?

[Fred Chen]

» China

It's about a month old, but surprised no one up in arms over this. Looks too remote? But 2017 may not be so remote after all..

 

[Daniel Payne]

Good luck to the Chinese in growing their DRAM market against established vendors like: Samsung, Elpida, Micron Group, SK Hynix, Nanya, Powerchip and Winbond.

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[Mike Bryant]

And indeed good luck to the Chinese. Micron Group, SK Hynix, Nanya, Powerchip and Winbond in even staying in the DRAM market once Samsung's new DRAM fab comes online !!

 

[Daniel Payne]

Mike,

You are correct in that the DRAM industry is driven heavily by price, volume and margins, so the largest fab with the best yield, design, process and costs can tend to dominate. For us consumers it is preferable to have multiple DRAM vendors competing to keep pricing lower.

 

[prime007]

To add to Daniel's point...

The last thing the world needs is for Samsung to dominate an industry. They've already been found guilty for price-fixing multiple times....LCD panels, DRAM chips, and mobile "price fixing and consumer fraud" (in Korea!).

As for the Chinese, I don't believe the situation is quite as bleak for them as you think. They've already demonstrated that they will actively hack & steal industry secrets. I'm sure state-sponsored Chinese hackers have attempted to (and probably succeeded in) hack Samsung & other Korean companies. They have the ability to create, grow & protect favored companies from international competitors due to weak IP laws & their selective enforcement of their laws. They have money (and lots of it!). They can easily buy out a existing smaller company or work with an existing larger company. They have a vast pool of engineers and talent. I could go on...but I think I've made my point, China has the ability to compete should she want to do so.

 

[Daniel Payne]

prime007,

Good points, however many large companies have been found guilty in court: Intel, Google, Microsoft, Apple, etc.

 

[benb]

DRAM has consolidated and has a nice profit equilibrium right now. In the past, this has been the stage where some new player enters, drives capacity up well beyond demand, and destroys industry profitability. If China wants to be a player in the industry, they will have to most likely lose money for 5 or 10 years first, until they acquire a stable customer base. Samsung and Micron won't give their big customers up lightly or without a fight. And they will certainly face tarriffs in Japan, USA, Taiwan, S. Korea and Europe. So DRAM made in China will have to be consumed in China. Which could be the whole idea anyway.

 

[Fred P]

china has benefited greatly from the market but it now seems bent on giving back these gains. Oh well, its an old story.

 

[Fred P]

Speaking of Samsung, why wont they be just like their Japanese predecessors 20 years from now? Not saying they will but it is more likely than not that they will enjoy the same fate.

 

[Mike Bryant]

DRAM has consolidated and has a nice profit equilibrium right now. In the past, this has been the stage where some new player enters, drives capacity up well beyond demand, and destroys industry profitability. If China wants to be a player in the industry, they will have to most likely lose money for 5 or 10 years first, until they acquire a stable customer base. Samsung and Micron won't give their big customers up lightly or without a fight. And they will certainly face tarriffs in Japan, USA, Taiwan, S. Korea and Europe. So DRAM made in China will have to be consumed in China

I expect China will insist products sold in China use Chinese DRAMs. and then before you know it they are in all these grotty white box tablets and phones you see even in the west. Plus Apple will get a quote from the Chinese and then insist Micron match it. So this will definitely bomb the market which is actually shrinking by wafer area for last few years as Moore's Law outpaces market growth.