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Memory Market Overview: February 2005

Date: 2005-2-12

   We?re resuming our traditional monthly reports about the well-being of the PC memory market. Since this coverage will deal with the results of the first month of the year, I will a...

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We?re resuming our traditional monthly reports about the well-being of the PC memory market. Since this coverage will deal with the results of the first month of the year, I will also try to summarize the results of the last year as well as make some forecasts for the entire 2005. The intrigue or rather topic for discussion here is the further penetration of DDR2 SDRAM into the market, and the main question is the extent of this penetration.

Despite the relatively good acceptance of the i915/i925 chipsets (although not as warm as it might be), the supply of DDR2 modules is not expected to be high till the second half of this year as the DDR2 share in the output of a majority of module manufacturers from Hong Kong and Taiwan is only about 1-5 percent (although Taiwanese analysts estimate the world's share of DDR2 as 13 percent against DDR's 72 percent).

Many manufacturers will have begun to increase the DDR2 production volume by the summer, but it still seems that it is going to take long for DDR2 to truly conquer the market. That's natural if you recall that DDR didn't replace SDRAM in a moment, although had more evident advantages than DDR2 has in contrast to DDR. The price difference between DDR and DDR2 is also too big today and doesn't match the difference in their performance. So AMD may be quite right in deciding not to support DDR2 until 2006 (even though this decision is partially due to the evident technical problems).

On the other hand, the chip makers are still increasing their potential to be ready to the possible (and highly anticipated) growth of demand. This time their hopes are invested in the Sonoma. Nanya, in particular, is going to resort to near dumping, reducing the price difference between its DDR2 and DDR modules to less than 10 percent, which should arouse the interest towards DDR2. Nanya even promises a price difference of 7 percent for its Elixir series of memory modules.

The company seems to await a powerful reaction (and quite reasonably I should say) as it intends to transfer up to 50 percent of its DRAM production facilities to DDR2 (compare this to today's 20 percent). Well, I have no doubts the demand will be growing, but the forecast that DDR2 will account for 70 percent of the world's DRAM sales by the end of this year seems an exaggeration as least. The market is usually more conservative than enthusiastic forecasters, especially if the forecaster is one of the manufacturers involved.

Talking about over-enthusiasm, I should mention the frequency factor, too. In January Kingston showcased the fastest memory module of today. It's 866MHz DDR2 SDRAM. These modules are so fast that they are guaranteed to work more or less correctly on one mainboard only, ASUS's P5AD2-E. Well, Kingston isn't planning to produce such modules in near future, but even the 750MHz modules from the same company scheduled for February have the same problem. It's like the Lamborghini is a good car, but not in the small streets in the center of a city the modern PC is. Well, you can buy one just for the heck of it, of course

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