NEW YORK -- Steve Appleton, chairman of Micron Technology Inc., doesn't see DRAM prices turning around from current low levels for the rest of the year, and perhaps into the first quarter of 2001.
During a luncheon interview at the New York Stock Exchange, Appleton said OEM contract prices have dropped to $4-to-$5 due to large amounts of memory chip inventory still existing in the market. "About half of our OEM customers still have DRAM inventory on hand that they must bleed off. Until they get rid of this inventory, we won't see much change in price," he told EBN in the interview.
The Micron chief executive said the current DRAM inventory buildup resulted from rival DRAM makers trumpeting threatened memory chip shortages for the fall. "Customers did what they always do. They ordered heavily to have enough DRAMs on hand for their fall production. When the shortages didn't happen, they were left with large stocks that had to be worked down."
Appleton said the flip side is that half of Micron's OEM customers have worked off their inventories and are back in the market again. "But now they can buy DRAMs at a very low price. So we are seeing many of them expanding the memory size of their PC products. Up to now the previous higher DRAM prices have caused the memory content of PCs to flatten out. Now we are once again seeing the memory content start to increase again."
Appleton reiterated Micron's claim to being the lowest cost DRAM producer in industry, so even at $4 each for basic 8x8 64-megabit chips "we are still making a profit. However, many of our competitors are now losing money again on DRAMs. That's why you see the Taiwanese pulling back to delay new fabs, and the Japanese to continue retrenching in DRAMs."
How about the Korean producers? Appleton has long been irate about the Korean DRAM expansion in the market at times of global glut. He questioned whether Samsung Electronics Co., which opened one new DRAM fab this fall and is building another 300-mm fab to open next year, is still pursuing an unwarranted economic expansion. He said Hyundai Electronic Industries Co. currently isn't adding new fabs, because the firm is concentrating on a technology transition, upgrading the former LG Semicon fabs it acquired.
Appleton said Micron itself is targeting about $2.3 billion for capital investment in its current fiscal year ending Aug. 21, 2001. This is up from $1.5 billion in the previous fiscal year.
He said all vacant space acquired from Texas Instruments is now being filled out. Boise, Idaho-based Micron is doubling the size of a development fab in Boise, Idaho, to 100,000 square feet. The firm is also building a new shell in Singapore to expand its assembly and test plant there (see Nov. 14 story). That facility will be equipped on a timetable depending on market conditions, he said.
He reiterated that the Lehi, Utah, shell complex is now being equipped with a 300-mm test pilot line. Micron will then wait on market conditions to determine whether to expand Lehi into a full production 300-mm wafer operation.
Appleton was at the New York Stock Exchange to commemorate the 10th anniversary of the firm's listing on the exchange. He ran the opening day bell to start trading on the floor.
