For Micron Technology, it is no longer meaningful to
implement the "Inotera Memories model" in China, according to Mark
Durcan, CEO for the US memory vendor.
The so-called
Inotera model sees Micron receive licensing fees and a portion of memory
production capacity from partners which lack sufficient technology but
are capable of scaling up output with huge capital.
Micron
already has enough DRAM production capacity and economies of scale, and
having another partner like the pre-acquisition Inotera is no longer
meaningful for the company, said Durcan. Micron's principle is to
protect the interests of shareholders and the team, while avoiding
destabilizing the industry supply-demand balance, Durcan continued.
In
fact, the joint venture deal betwen Micron and Nanya Technology was
quite successful. Inotera was allowed to expand its DRAM production
capacity with technology licensed from Micron and capital from Nanya,
and Micron and Nanya were both able to expand their respective output
and global market share.
Nevertheless, the current
circumstances are different as DRAM prices have become more stable, and
Micron's production base worldwide has expanded substantially, Durcan
said.
Micron recently completed acquiring Inotera,
formerly a Taiwan-based production partner of the US firm. Previously,
Micron took over Taiwan-based Rexchip Electronics as a result of its
acquisition of Japan's Elpida Memory. Taiwan now accounts for more than
60% of Micron's overall DRAM production capacity, which is mostly
Micron's leading-edge capacity, Durcan said.
At the
same time, China is aggressively developing its homegrown chipmaking
industry including the memory sector. State-backed Tsinghua Unigroup had
previously proposed a more than US$20 billion bid for Micron, but the
offer is believed to have been turned down. Nevertheless, China remains
aggressive in building its homegrown technology for making DRAM chips.
China
will definitely be capable of finding a partner like Micron to license
technology and make joint investments with, but for Micron, it would be
appropriate to implement such a model 10 years ago when the DRAM
industry was still immature and very competitive, Durcan noted. The
industry has now entered its mature stage, and the chip prices tend to
grow at a relatively stable rate. For Micron, there is less reason to be
in that kind of relationship than there was 10 years ago, Durcan added.
However,
such a joint-venture model may make more sense in the NAND flash
sector, where the chip prices remain volatile and suppliers require huge
capital to expand their production capacity, Durcan indicated. In
China, nevertheless, implementing the model could be complex since every
group of investors has their own interests and values that have to be
materialized, Durcan said.
In addition, Durcan
commented that 2017 will be a "pretty good" year for the DRAM market as
supply seems to be well-controlled and demand is strong. As for NAND
flash, end-market demand is growing fast while suppliers are
transitioning to 3D technologies. The NAND flash market for 2017 is more
difficult to predict, Durcan said, but he believes the supply will
still be tight at least for the first half of 2017.
The
overall memory market outlook for the next 18 months is quite positive,
said Durcan, adding that suppliers are more cautious about their
investments and capacity expansions. At least spending from Micron's
competitors tends to be more reasonable, Durcan said.
In
other news, Micron on December 12 celebrated the completion of its
share swap agreement with Inotera. Leaders from both companies joined
Taiwan President Tsai Ing-wen for a closing ceremony at Inotera's
headquarters in Taoyuan. Durcan remarked at the ceremony that the
company will continue to expand its investment in Taiwan with plans to
establish a backend facility in Taichung for the manufacture of 3D DRAM
products, and to add more than 1,000 jobs at its local sites over a
number of years.
http://www.digitimes.com/news/a20161214PD200.html
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