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Another memory plant delayed

Following Toshiba and others, NEC is considering a year's delay in ramping up 64-megabit memory chip production.

NEC Corporation is considering a year's delay in ramping up next-generation memory chip production, the latest cutback amid industrywide retrenchment owing to slumping prices.

NEC may wait until 1999, or later, to begin manufacturing 64-megabit DRAM (dynamic random access memory) chips at a plant in Sagamihara, Japan, because of slumping memory prices and the high cost of production equipment, Nihon Keizai Shimbun reported today.

Earlier this week, rival Toshiba also decided to push back the scheduled opening of a 64-megabit memory chip plant.

The computer industry currently uses 16-megabit chips in the memory modules found in PCs, portables, workstations, and server computers. 64-megabit chips can pack four times as much data onto a single chip, giving a standard-sized memory module four times the capacity. Later this year, workstations and servers will begin incorporating 64-megabit chips, to be followed by PCs and notebooks in the later half of 1998 and 1999.

Most memory manufacturers now have 64-megabit production online, but the Sagamihara plant would produce memory chips on 300mm (or 12-inch) wafers, larger than the 200mm (or 8-inch) wafers currently in use. The larger size accommodates two and a half times the number of chips, reducing manufacturing costs by about 30 percent.

It's a difficult time for manufacturers to innovate, however, as DRAM prices have been on a losing streak. 64-megabit DRAM chips began 1997 at $75 and finished the year at just about $30, according to Dataquest, a market research firm. The chips will be priced around $21 by the end of 1998, Dataquest predicts.

South Korea's general economic turmoil has also played a role in persuading Japanese firms to put off capital spending, asserted Dataquest analyst Bruce Bonner. Because companies like Samsung have been forced to pare development costs, Japanese firms can afford to delay implementing new technologies.

"Now that the South Koreans aren't the hyper-competitive force they used to be because they have to watch their pennies, their competitors can pull back their?discretionary spending," he said

Bonner also pointed out that the development work for 300mm production can be done at existing plants that use 200mm production.