Samsung leading DDR2 push in upcoming year

Samsung Semiconductor plans to expand its production of DDR2 memory in 2005 to the point where DDR2 becomes its largest product category, setting the stage for decreases in price, the company announced last week.

DDR2 (double data rate 2) memory is the planned successor to the DDR SDRAM (synchronous dynamic RAM) standard currently used in most of the world's PCs. The first DDR2 chips started to appear last year around the launch of Intel's 915 chipset for desktop PCs, but the chip maker's Alviso chipset for notebook PCs will be the real catalyst for DDR2 growth this year, said Jim Elliot, associate director of DRAM for Samsung.

The company expects to ship more DDR2 chips than DDR chips in the third quarter, and will exit the year with DDR2 representing 44 percent of its memory chip shipments, Elliot said. Samsung enjoys the top spot in market share for DRAM memory chips, with 29 percent of the total market in 2004, according to market research from iSuppli Inc.

Micron Technology will also see a crossover point sometime in the middle of 2005 where DDR2 shipments exceed DDR shipments, a company spokeswoman said. Infineon Technologies plans to boost DDR2 production in the current quarter to about 20 percent of its total shipments, but has not released its projections for the rest of the year, a company spokesman said.

Over the last few years, memory vendors have improved the performance of their chips by increasing the speeds at which they process data, much like Intel did for years with processors. However, as the speeds of DDR memory chips exceed 400MHz, the overall performance of the chip begins to suffer due to increased signal noise. DDR2 memory improves the clarity of those signals, paving the way for speed increases up to 667MHz.

Demand for DDR2 on the desktop has been lukewarm to this point, said Dean McCarron, principal analyst with Mercury Research in Cave Creek, Arizona.

When Intel introduced the 915 chipset last year, PC companies were overwhelmed with numerous changes including the PCI Express interconnect technology, DDR2 and a new packaging design for Intel's chips, he said. Since the new chipset also worked with DDR memory, many PC companies chose to stick with DDR memory in order to reduce the number of changes to their systems, he said.

Intel also delivered the 915 chipset later than expected because of a recall due to a manufacturing glitch, leading many companies to choose older chipset technology when designing PCs for the second half of 2004, McCarron said.

The increased performance from DDR2 memory provides benefits to a relatively small percentage of users who are pushing their PCs to the limits of current technology. Those users are willing to pay for the extra performance of DDR2 memory today, but most mainstream users have not spent extra money on the new technology over the past six months.

However, the new memory standard delivers several benefits for mainstream notebook users beyond performance, Elliot said. It uses less power than DDR memory, which improves battery life and operates at cooler temperatures than DDR chips.

The new Alviso notebook chipset supports both DDR2 and PCI Express, and Intel plans to move very quickly toward making Alviso the centerpiece of its mobile chipsets. It will end 2005 shipping more Alviso chipsets than the older technology, an Intel spokeswoman said.

To that end, Samsung will need to meet demand for DDR2 memory during the second half of the year, which is typically the busiest season for PC makers, Elliot said. Around that time, desktops with DDR2 will become more common as Intel cuts prices on the 915 chipset with the introduction of new desktop chipset technology around the middle of the year, and server vendors start to work the new memory standard into their designs, he said.

A new memory standard doesn't really take off until the new chips are cheaper than the older ones, McCarron said. That tends to happen some time after the production crossover point, as the older chips grow scarce while the newer chips become plentiful, he said.

DDR2 pricing should be equal or less than DDR pricing by the end of this year or the beginning of 2006, McCarron said.

Advanced Micro Devices (AMD) has reserved its support for DDR2 as the first memory chips have hit the market. AMD's Athlon 64 and Opteron chips use an integrated memory controller, which must be designed for a specific type of memory at launch and tweaked to support new standards in subsequent versions.

The company is likely designing its DDR2-compatible chips at the moment, and won't release them until DDR2 becomes cheap enough to start taking over the market, McCarron said.

Rambus certainly believes that DDR2 memory chips will become more prevalent this year. On Tuesday, the company broadened the scope of its patent lawsuits against DDR memory chips to include DDR2 chips made by Infineon and other memory companies, citing the expected increase in DDR2 shipments this year.

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