The move comes as memory chipmakers shift strategies in order to make more money in a business that has been clobbered over the last few years by plunging prices.
Makers also face too many memory technology standards, forcing many to pursue several different standards at the same time since it is not clear which standard, if any, will dominate in the future. Currently, popular standards include SDRAM, Rambus DRAM (RDRAM), and double data rate (DDR) SDRAM.
While DRAM chips are used in the main memory of all PCs today, 64-megabit capacity SDRAM chips are the most widely used chips today. Generally, the higher the capacity of the chip, the more data can be crammed into the same amount of silicon real estate, leading to computers with greater amounts of memory, which enhances performance.
Toshiba said it will shift the majority of its DRAM production to 128-megabit SDRAM "and other high-performance memory."
The plan calls for cutting back 64-megabit DRAM production to 1 million units per month by December 1999, the company said. Toshiba also said it is moving to a more advanced manufacturing process called "0.20 micron" at all of its facilities. Today, processor makers such as Intel, by comparison, use a 0.25-micron process. This specifies the width of the transistor. Generally, the smaller the process, the more advanced the chip.
The electronics giant will try to cover all its bases as it moves to a higher capacity memory. "In response to customer demand, Toshiba will accelerate the output of 128-megabit SDRAM, DDR SDRAM, and RDRAM. This enables efficient volume production of 133-MHz SDRAM, 800-MHz RDRAM, and other high-density memory solutions," the company said in a statement.
Rambus's RDRAM is considered by some to be the performance leader and possibly the dominant standard of the future but nobody's sure at this point, causing memory makers to hedge their bets. The Rambus memory system helps to ameliorate the growing speed disparity between computer microprocessors and memory. As processors have gotten faster and more powerful, it has been harder and harder for a computer's memory to keep it supplied with the data it needs, so the microprocessor ends up doing the electronic equivalent of twiddling its thumbs.
But makers aren't flocking to Rambus memory as much as analysts and industry observers expected.
"This just about says that they have ruled out widespread adoption of Rambus for 1999, and probably for the first half of 2000," said Danny Lam, a principal at Fisher-Holstein, a consulting firm.
"The initial emphasis is on SDRAM...[which] chips away at the performance lead that Rambus has over SDRAM," he said.
"I think the jury is still out [on Rambus]," said Jamie Stitt, DRAM business development manager at Toshiba's U.S. operation. New chip packaging and testing equipment raises the cost from between 30 and 50 percent over standard SDRAM memory chips, he said. "Rambus increases the outlay up front. To achieve [production] yields, the absolute minimum is [the] 0.2 [manufacturing process]." He added that moving to this advanced process will be a challenge for some memory makers.
But he did add that manufacturers will eventually have to move to more advanced technologies anyway and that Rambus is driving this move.
More ominously though, he pointed to trends in the PC market that may mean a less enthusiastic reception for Rambus memory in the future. "Sub-$1,000 and sub-$600 are redefining what the mainstream is and locking in standard [non-Rambus] memory technologies." But Windows 2000, he believes, may be what drives PC makers to Rambus since this will require high performance, though a large movement to Windows 2000 is still a couple of years away, he guesses.
"Whether the industry demand is for SDRAM...RDRAM or...DDR SDRAM, Toshiba will be able to respond within the normal production cycle-time," he said, implying that Toshiba is indeed hedging its bets.
"DRAM manufacturers are saddled today with difficult choices, mainly requiring them to enhance processes and change [standards] at an accelerating rate, at a time when investment capital is difficult to obtain," Jim Handy, principal analyst, at Dataquest, said in a statement.
The one bright spot is that prices for memory have been increasing over the last few quarters. Last week, Micron reported profits of $34 million, its first since its first fiscal quarter of 1998, partly due to the strength of memory prices. This is a positive sign, as memory manufacturers have been facing losses or low earnings since 1996.
The industrywide cutback in plant investments and production stoppages helped cut down on the oversupply condition that has plagued the industry. according to Sherry Garber, senior vice president of Semico Research. Toshiba is focusing on high profit-margin markets including servers, workstations, high-end PCs, and notebook PCs,"