Micron Technology reportedly has reached the final stage of talks on the purchase of Elpida Memory. The possible merger of Micron and Elpida will help to restore a healthier supply-demand balance to the DRAM industry.A Japan Times report quoted unnamed sources as saying that Micron will have the right to negotiate exclusively to buy Elpida after offering a total of JPY220 billion (US$2.75 billion) for the bankrupt Japanese company. A final deal is expected to be concluded by the end of May 2012).A combined Micron/Elpida entity would not only balance against the two dominant DRAM manufacturers - Samsung Electornics and SK Hynix - but also help the industry head towards a healthier state. The merger between Micron and Elpida is also expected to better leverage support provided by their respective affiliates and production partners in Taiwan.Micron initially offered US$1.5 billion for Elpida - considered as a move to find out levels of acceptable prices for both seller and buyer. Hynix and Toshiba reportedly were among the other bidders, while Globalfoundries and China's SMIC were said to be interested to Elpida's Hiroshima plant.Private equity firms - China's Hony Capital and TPG Capital of the US - reportedly have also teamed up to bid for Elpida. While rumors continue to spread about the fate of the Japanese chipmaker, Micron is believed to have won the bid and has entered merger talks with Elpida.In a February report by IHS iSuppli, a possible merger between Micron and Elpida has the potential to dramatically redraw the competitive landscape of the DRAM space. The union between the two companies would catapult the newly consolidated entity to second place in the global DRAM market with a combined capacity of 374,000 wafer starts per month based on the latest available information, according to IHS.The Micron-Elpida entity would have a 28% share of worldwide DRAM manufacturing capacity, placing it just behind leader Samsung, currently with 433,000 WSPM or 33% share of global capacity, IHS said. Hynix would fall to third place given a 23% share of capacity, or 300,000 WSPM, IHS noted.The Micron-Elpida merger is also expected to consolidate and expand their respective partnerships with Taiwan-based DRAM firms including Nanya Technology, Powerchip Technology, Inotera Memories and Rexchip Electronics - a move to unite DRAM players from the US, Japan and Taiwan into an alliance to compete against their fellow Korean rivals.In the mobile DRAM marketplace, Samsung led with a 53.8% market share in the fourth quarter of 2011 followed by Hynix with 20.8%. Micron's merger with Elpida would have their combined share reach 24.3%, outpacing Hynix's. Acquiring Elpida would also allow Micron to cut into the supply chain of Apple. Elpida began supplying mobile RAM chips for Apple's smartphone and tablet devices in the second half of 2011.Micron said to be near acquisition of bankrupt ElpidaDigitimes file photo

NAND flash memory is among the key components used in today's popular consumer technology products. The birth of NAND flash could be credited to two Bell Labs researchers who fabricated the world's first floating-gate nonvolatile memory (NVM) memory device. Simon Sze was one of the inventors.Along with William Shockley's discovery of the transistor effect, and integrated circuits invented by Jack Kilby and Robert Noyce, Sze's invention with Dawon Kahng of floating-gate NVM devices was one of the major breakthroughs in semiconductor technology.Kahng and Sze proposed the first floating gate device in 1967, around the same time when IBM invented dynamic random access memory (DRAM) cells. IBM's computer memory breakthrough drew much attention actually, Sze recalled. DRAM memory grew its adoption rapidly in PCs during the 1970s, and has become a commodity type of chip.However, with consumer habits changing, the DRAM business is now encountering a shrinking market for traditional PCs. Sze indicated that the market for NAND flash chips had not been practically developed until the 1990s when mobile phones started to be widely used.NAND flash is one of the NVM types, which can keep stored data when a device's power is turned off, while DRAM functions more like the "working memory" in a computer, Sze said. Both have their own expertise to satisfy different market demands.Unlike DRAM chips that immediately replaced magnetic core chip technology as the main computer memory when first introduced, NVM memory devices were not commercialized until about 20 years after their debut, Sze observed.Floating-gate NVM devices were introduced in 1967, and first used in end products in 1984, Sze disclosed. The memory was adopted by Nintendo in its gaming devices to automatically retain the stored information so that players can move onto the next stage, Sze said. Floating-gate devices were also first equipped into BIOS chips to speed up the boot process for PCs.Floating-gate NVM memory started to see its wide adoption during the 1990s when demand for handsets and memory cards boomed, Sze pointed out. Memory cards using NAND flash for storing photographs began to pose a threat to the market for traditional film products, Sze added.The popularity of Apple's i-series products does mark a turning point for NVM memory, according to Sze. The market for NAND flash memory has expanded its size big enough to challenge that of the DRAM market. According to statistics, more than 30 billion electronic products using the float-gate memory have been shipped, and the total accumulated number will top 80 billion units within the next 10 years, said Sze.Looking forward, it is anticipated to see a new memory technology to replace floating-gate devices, Sze indicated. But the floating gate memory should maintain its presence for at least 20 years. A number of new "unified" memory devices - which come with high-speed, high-density and non-volatile features - are still in their early stages of development, Sze said.In addition, Sze commented that the market for NAND flash will be driven by its diversified applications - from digital cameras, flash drives to smartphones, SSDs and future technology products. Demand for NAND flash will boom thanks to the memory's high density, low power, non-volatile, rewritable and small size.Sze also suggested that the Taiwan semiconductor industry should enhance its relationship with China in order to stay competitive. The government should adopt a more open policy to attract talents and investment as the development of the island's economy and industry should not be disrupted by political issues, Sze urged.Sze made the comments during his recent presentation at National Chiao-Tung University (NCTU), Taiwan.Simon Sze, inventor of floating-gate NVM devicesPhoto: Josephine Lien, Digitimes, March 2012

Long-term solar material supply contracts seem to stabilize the financial performance of solar firms during good times, but increase the magnitude of losses during down times.Before 2011, the solar industry experienced shortages of polysilicon. This pushed the price of polysilicon to reach above US$100/kg at one point. Fighting for material was a must for downstream solar firms. During the years of shortage, solar firms constantly needed reassuring measures to obtain continuous flow of material. Signing long-term supply contracts became the solution for this shortage problem.The long-term supply contracts have become one of the reasons that solar firms have been suffering net losses. The firms signed contracts when the price of polysilicon was relatively high, compared to the spot price now.Chihheng Liang, Digitimes Research analyst and author of new a report PV 2012-Expectations for the global solar market, indicated that spot price of polysilicon in Greater China last week (April 23-27) was US$22.5/kg and the spot price of polysilicon two months ago (February 20-24) was US$29.5/kg.This means the spot price of polysilicon dropped 23.7% in two months.In recent weeks, Europe-based material suppliers have been reportedly considering filing lawsuits against Taiwan-based downstream customers for failing to oblige to their supply contracts. Taiwan-based firms have been considering fighting the lawsuits collectively and asking the government to help.Taiwan-based solar cell maker Neo Solar Power (NSP) recently announced its financial performance for first-quarter 2012. The firm reported net losses of NT$1.817 billion (US$62 million) which included write-offs of losses incurred from long-term material supply contracts.Spot price of polysilicon hits US$22.5/kg in recent weeksPhoto: Digitimes file photo

India has been seen as one of the markets with most potential for the solar industry as demand in Europe weakens. A recent article from The Economist, "Solar Power In India: Waiting for the Sun", has stated that the India market might just boom.The article indicated that power firms in India that produce electricity by burning coal have been forced to buy pricier coal because "the state local monopoly is unable to dig up enough of the black stuff [coal]". This can become an incentive for power companies to turn to solar power. The cost of solar PV systems has been falling since third-quarter 2010, and compared to the pricier coal, it is possible that the price of solar in India will be similar to conventional energy by 2016.Furthermore, according to financial institutions, the government has vowed to install 20GW by 2022. Current installations in India are about 1GW.According to PV 2012-Expectations for the global solar market, a new report from Digitimes Research, India's installations in 2012 are likely to reach 1.4GW because both subsidies from the federal government and the Gujarat state government will increase. In addition, new installations will be added in states such as Rajasthan and Karnataka. These states have been providing lucrative subsidies for solar PV installations, according to Digitimes Research.Nevertheless, there are some concerns about the solar market in India. According to The Economist, grid connections and shortages of water to wash panels are two of the most common concerns. Also, despite lucrative subsidies provided by state governments, the federal government uses "reverse auctions" to promote solar PV installations. Reverse auctions mean giving operating rights to the solar firms that can produce power at the lowest cost. Many people doubt that this mechanism will help the firms to make money.Digitimes Research noted that the solar market in India is quite different from other emerging solar markets such as the US and Japan. The solar market in India is highly price-competitive, and hence has been filled with low-price products, similar to in the China market.This cause a backlash for solar firms, but may also mean that grid parity can be achieved in India sooner than expected.India government vows to have 20GW of solar installations by 2022Photo: Digitimes file photo

The US government has been taking up anti-dumping and anti-tariff investigations against China-based solar firms. According to LA Times, the US government recently announced the import tariff of 2.6-4.7% on China-made solar products. A second round of tariff may be announced by the Department of Commerce in May, said paper.China-based solar firms, however, have been finding ways to avoid paying the tariff such as transfering solar cell orders to Taiwan. Taiwan-based solar cell makers have been experiencing rising capacity utilization rates but indicated that orders from China-based firms often have unprofitably low quotes. China does not want to give up on the US market because it is one of the fastest growing solar markets in the world.According to a new report from Digitimes Research, "PV 2012 - Expectations for the global solar market," growth of solar demand in the US has been shot over 100% every year since 2009. Furthermore, total demand in the US is likely to reach 3.8GW in 2012.The LA Times coverage indicated that some tariff advocates believe this ruling will help to create jobs in the green sector in the US. However, others noted that most green jobs in the US are in installation, sales and distribution of solar PV systems. The tariff on China-made solar goods is likely to increase cost for solar PV systems and weaken the competitiveness of US-based installation firms.The global solar supply chain is interconnected. Despite China's strength in producing solar cells and modules in large volume, the US has been dominating the global solar market in polysilicon and solar equipment. If the capex of China-based solar firms fall due to the tariffs, negative impacts will hit polysilicon and solar equipment firms in the US. In addition, increasing the cost of solar PV systems will likely become a deterrent for customers in the US to switch to solar.

The Taiwan government recently announced a plan to increase electricity prices in May 2012. Compared to a country like Germany with average electricity price of NT$8/kWh, Taiwan's average electricity price of NT$2.67/kWh seems low. Also, the Taiwan government's aim to have solar PV installations of 3.1GW by 2030 is also quite low. In another words, in 18 years, Taiwan plans to add 3.1GW of solar PV system installations, while Germany added 3GW of new solar PV system installations in December 2011 alone. The goal seems a bit lazy on the government part as Taiwan is one of the major countries that produce solar wafers and cells.Taiwan has a population around 23 million people and land about 35,000 square kilometers. Within this small area, Taiwan has three running nuclear power plants in addition to traditional power generating facilities. In addition to the low electricity price and lack of effort from the government to promote solar PV system installations, residential conditions, high interest rates on loans, and lack of education on solar PV knowledge are likely to prevent people in Taiwan switching to solar power.Many of the people in Taiwan live in apartment buildings, such as those in New Taipei, the most populous city of the nation. This means they do not have their own roofs. For a household that wants to use solar PV systems, it may need to obtain permission from the building committee or most of its neighbors in the same building to use the rooftop for solar PV system installations. The trouble of going through this permission seeking process is often a deterrent.In many parts of Taiwan, such as New Taipei's neighboring port city, Keelung, weather conditions form another deterrent. Keelung has the lowest sunshine hours in Taiwan. This means it may not be profitable for households to install solar PV systems despite the high feed-in-tariff rate of NT$7.30-9.50/kWh.Most importantly, Taiwan's financial institutions do not have special interest rates for solar PV system installations. The government currently provides special loans for banks to finance large-size solar PV system installations and the return of investment on solar PV systems is about 5.25%. But for individual systems, which are more suitable for people living in the cities, the interest rate of the loan is about 4.08%. The interest rate plus processing fee of 2.5% charged by the banks, this investment will incur losses.According to Chihheng Liang, author of Digitimes Research's new report "PV 2012 - Expectations for the global solar market," customers that want to install solar PV systems need to pay all fees for the next 20 years in one payment. This means customers need to make sure the buildings they live in will last at least 20 years. The most urgent problem is that people in Taiwan do not have enough knowledge about solar PV systems.Lack of encouragement from government results in low solar PV installations in TaiwanPhoto: Digitimes file photo

Taiwan Semiconductor Manufacturing Company (TSMC) could ramp up its 28nm production capacity at a much faster pace than older 40/45nm and 65nm process nodes, according to Digitimes Research analyst Nobunaga Chai. To make such speculation about yield problems with TSMC's 28nm processes is unfair, said Chai, adding that the foundry is actually improving the process yield rate within its expectations.When TSMC started ramping up its 40/45nm production capacity, it took 5-6 quarters to have the process contribute 10% to company revenues, Chai pointed out. As for 65nm, the period was shorter but still longer than three quarters allowing the process to account for 10% of TSMC's revenues, Chai said.The newer 28nm technology started generating revenues in the fourth quarter of 2011, and the sales ratio is estimated at about 5% in the following quarter, Chai noted. It is anticipated to see TSMC significantly ramp up its 28nm production capacity later in 2012, Chai believes.TSMC's current yield rate on its 28nm processes is not poor at all, but maybe has not yet reached a certain level that is able to persuade the company to expand capacity aggressively, Chai indicated. Despite being cautious, TSMC's 28nm expansion plans have been kept on track, Chai said.In addition, let's not forget that 28nm is still new in the industry, Chai said. Making chips using the process is still not stable and some companies recognize it is a risk to their products, Chai observed. Apple, for instance, still uses 45nm to manufacture its newest A5X chips.TSMC previously had yield problems with its 40/45nm process technology, and saw the ramp-up schedule interrupted. Revenues from the nodes accounted for as little as 1% in the first half of 2009. The proportion climbed slightly to 4% in the third quarter, and finally approached 10% in the last quarter of the year.Around mid-2009, Rick Tsai resigned from his position as TSMC CEO, with chairman Morris Chang returning to the helm. Later in the year, TSMC hired its former VP of R&D Shang-Yi Chiang to again lead its R&D.TSMC in October 2011 entered volume production for its 28nm processes. Sales of 28nm accounted for 2% of TSMC's revenues in the fourth quarter of the year.Chang remarked previously that TSMC's 28nm process technology would play an important source of company growth in 2012. TSMC: Sales contribution made by 65nm during ramp-up 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 40/45nm 0% 0% 0% 0% 0% 0% 0% 0% 0% 1% 65nm 0% 1% 3% 7% 10% 15% 18% 25% 27% 23% Source: Company, compiled by Digitimes, April 2012 TSMC: Sales contribution made by 40/45nm during ramp-up 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 28nm 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 2% 40/45nm 1% 1% 4% 9% 14% 16% 17% 21% 22% 26% 27% 27% Source: Company, compiled by Digitimes, April 2012 TSMC: Sales contribution made by 28nm during ramp-up 4Q11 1Q12(e) 28nm 2% 5% Source: Company, compiled by Digitimes, April 2012

China-based solar firms have been beating peers around the world with its low product costs. However, competition among the China-based makers in the domestic market is a different game. Comparing with Europe- and US-based firms, China-based solar firms have strong competitive advantages such as low costs and support from the government. But once the firms have to compete with one another in the domestic market, the game has becoming "a hunger game."China's domestic solar market is a playing field that has been leveled for China-based solar giants. The less competitive firms in China have been suspending productions due to low demand in 2011. Hence the battle is solely between large-size, vertically integrated solar firms.The debate over vertical integration has been ongoing in the solar industry. China-based firms have been aggressively integrating from polysilicon to solar modules in hope to avoid being hijacked by firms in other countries. Some even have gone as far as developing and financing projects in the international market. With prospects in Europe starting to look bleak, China-based firms have been shifting their focus back to the domestic market.Some research institutes predict that China is soon to be the second largest solar market in the world, beating Italy.Now may be a good time to see the true competitive advantages of China-based solar giants as they fight over the domestic market and compete with each other. Nevertheless, China's solar industry may need to find ways to lower its dependence on imported polysilicon from international firms because as long as international firms control the supply of solar materials, solar firms in China may find their hands tied by foreign firms.Ties with the government are also crucial for a business to succeed in China, and may become the key factor for the winner.

Elpida Memory's bankruptcy filing reflects the fact that companies must diversify to cope with trends in the evolution of customer behavior and usage. The DRAM memory industry currently is encountering a shrinking market for traditional PCs, which have been are main DRAM consumer. The rising adoption of mobile computing devices such as tablets does provide an opportunity for DRAM makers, but such devices consume a lot fewer chips than desktops encouraging some chip suppliers to diversify their businesses.Even for memory firms that offer both DRAM and NAND flash and have shifted their expansion focus to the latter product line, a substantial fall in DRAM demand and prices has prompted them to consider new directions to maintain their scale. SK Hynix (formerly Hynix Semiconductor), for instance, has revealed plans to diversify into the foundry business.In fact, entering the foundry business is not new for DRAM makers, especially for second-tier players. History shows that during bad times, companies such as Powerchip Technology (formerly Powerchip Semiconductor, PSC) and ProMOS Technologies intended to increase their wafer starts for foundry production. But in the current circumstances, not only second-tier but also top-tier memory firms are seeing expanding their moves into the foundry business as a must.SK Hynix, at the end of March, announced its goal to become a comprehensive semiconductor company, through providing foundry services for non-memory chips. The firm expects its mobile solutions business to account for 70% of revenues by 2016, from the current 40%.Samsung Electronics has already taken a serious approach to expanding its logic foundry business. Having secured orders from Apple, Samsung is aggressively ramping production for application processors and is now considered a major rival to TSMC.According to Gartner, TSMC still led the 2011 IC foundry market with a 48.8% share, compared to 47.1% in 2010. Samsung's foundry business, when including Apple's orders, generated about US$1.47 billion in 2011 and ranked as high as No. 4 in the ranking, Gartner said.Powerchip's decision to shift to foundry has so far been successful. According to Gartner's data, its foundry revenues jumped almost 200% in 2011 to help the firm move up nine spots to No. 10 among IC foundries. Powerchip's sufficient 12-inch fab capacity has attracted orders for LCD driver ICs, CMOS sensors and power management chips.Falling PC demand encouraging DRAM makers to diversifyPhoto: Digitimes file photo

Taipei, Taiwan - Growing concerns about energy and emissions are driving a revolution in the lighting sector, according to a new report from Digitimes Research. Advances in technology and falling prices will see the global penetration rate of LED lighting rise from a mere 1.5% as recently as 2009 to 11.6% in 2012, reaching 25.8% by 2014.This change is nowhere more apparent than in Japan, where power shortages following the earthquake and tsunami of March 2011 have spurred both the public and private sector to seek ways of reducing energy consumption. To this end, Japan has set a target of achieving a 50% LED lighting penetration rate by 2015; this may sound ambitious, but Digitimes' research shows that the country is likely to easily meet the 2015 goal. Other nations including South Korea and China have also set significant LED lighting targets for 2015.Japan's LED lighting sector is also booming, with both household names like Panasonic and Toshiba and smaller players such as Koizumi seeing sharp growth in LED lighting sales. South Korean giants Samsung and LG are stepping up efforts to seize market share in Europe and North America and restructuring their LED businesses, while Siemens' subsidiary Osram seems likely to become the subject of Germany's largest IPO since Deutsche Post. US giant Cree and Philips, by contrast, are making a major push into China, both in terms of manufacturing and sales.For detailed analysis of the major trends and players in the global LED lighting market, see Digitimes Research's new Special Report, "Trends in the high-brightness LED lighting market."About DIGITIMES ResearchDIGITIMES Research is the research arm of DIGITIMES Inc., Taiwan's leading high-tech media outlet. Operating as an independent business unit, DIGITIMES Research focuses on monitoring key high-tech industries, while also guiding clients toward suitable new business as well. Market intelligence and analysis is provided to more than 1,000 corporate customers worldwide. Research and consulting services cover a full range of industries, including information and communications technology (ICT), flat panel display (FPD), renewable energy and semiconductor design and manufacturing.Contacts:Michael McManus (Michael.mcmanus@digitimes.com)Shannen Yang (Shannen.yang@digitmes.com)Source: Digitimes Reseach, February 2012