DRAM Market Remains Healthy as Qimonda Gains Strength

It remains one of the least recognized brands among consumers in the electronics field, and yet Qimonda -- the recently spun-off, former memory components division of German semiconductor giant Infineon -- continues to carve a position for itself in DRAMs.

In its latest quarterly report on the DRAM industry, published yesterday, semiconductor industry analysis firm iSuppli reported Qimonda's shipments increased 17% over the previous quarter, boosting its estimated earnings from DRAM by 29% in that quarter to $1.55 billion. In so doing, the company captured an estimated 0.7% of market share, cementing its position as the world's #2 DRAM provider after Samsung.

Qimonda? The US division of the company operates a 200-mm and 300-mm fabrication facility in Richmond, Virginia, in addition to Qimonda AG's facilities in Germany. There, its plan is to concentrate on DRAM, even though it still retains a small share of the NAND flash market - although it may continue toward its stated goal of 75 nm flash production, that priority is relatively minor, and could be phased out before too long.

As Qimonda first emerged from Infineon's shadow, it found itself trailing Samsung in the miniaturization department, just then completing its transition from 100 nm to 90 nm lithography while Samsung was proceeding all the way down to 70. Now, Qimonda has a goal in mind of 58 nm, though its timetable -- if it has one -- hasn't yet been specified.

Still, as Qimonda picks up the baton from Infineon and runs with it, the company proves one of the strongest contributors to what iSuppli characterizes as a growing market in general. In so doing, it's centering a chunk of that growth around an American-based management and manufacturing team, at the same time other companies are continuing to build overseas.

Yesterday, Qimonda reported its end-of-fiscal year financial results, closing out fiscal 2006 with a 35% gain in net sales over Infineon's DRAM division numbers the previous year. With DRAM prices only now on the upswing, where is the company picking up the brunt of its revenues?

The lucrative market for DRAM right now is in the graphics arena, specifically in GDDR. Shipments of graphics memory to both ATI and nVidia rose by a colossal 80% in fiscal 2006 over 2005, and 17% in just the last quarter, especially as a new product line from nVidia comes to light.

Samsung still commands the DRAM market, though, according to iSuppli, with 27.8% market share and third-quarter revenue from DRAM estimated at $2.55 billion. Number three Hynix Semiconductor pulls in a strong third at $1.45 billion revenues, and 15.8% market share.

But iSuppli goes on to mention yesterday, rising DRAM market prices helps Taiwanese suppliers most, including #8 ProMos at 4.8% (and you thought you hadn't heard of Qimonda), which is showing a 59% annual growth rate.