Japanese electronics giants NEC and Hitachi plan to build a $1.4billion DRAM-chip plant in a bid to dominate in the world market. The factory will be built and operated by Elpida Memory Inc., a joint venture of the two companies founded in April, and will produce advanced dynamic random access memory, or DRAM, chips.
DRAM, used in PCs and portable devices such as digital cameras and MP3 players, represents a significant source of income for chipmakers. "There's no question that DRAM is going to become critical in the digital age," says Tim Bajarin, president of technology consulting firm Creative Strategies. "It's a relatively safe bet that demand is going to increase" as devices that use the chips become more common, he says.
Through Elpida, NEC and Hitachi hold a combined 13.6% market share in the global DRAM market, making them the world's fourth-largest memory chipmaker, according to research firm Dataquest. Korean giants Samsung Electronics and Hyundai Electronics lead the industry with 20.7% and 19.3%, respectively. U.S.-based Micron Technology is third, with 14.4% of the market.
The new plant, which is due to start producing chips in the first half of 2002, will be in Hiroshima, Japan. At full throttle, it will make 20,000 wafers per month. Elpida is expected to post $3.1 billion in sales in fiscal 2001 and aims for profitability in fiscal 2003.