Corsair Memory, a US-based memory module maker that focuses on the high-end memory modules for gamers and PC enthusiasts, recently received validation for Nvidia's nForce4 SLI Intel edition platform. The company claimed the DDR2 memory module employed is currently the world’s fastest of its kind. DigiTimes recently had the chance to interview company president and CEO Andy Paul to talk about Corsair’s competitive edge, business model, new DDR2 modules for the Nvidia new platform chipsets and its viewpoint on the DDR2 technology.
Q: How big is Corsair in terms of total revenues, market share and shipments?
A: Corsair expects its revenues to approach half a billion dollars and ship over 5 million memory modules in 2005. Our sales have been doubling each year for four consecutive years and this year will likely be another banner year for Corsair.
Q: What proportion of the memory module market do you currently have? What is your goal for the next few years?
A: Corsair is known for its high performance modules for the enthusiast market. The market, being a specific segment of the overall memory module market, has not yet been as closely monitored as other segments. However, as far as we can tell from our customers, vendors and independent polls, we have a very high percentage of this market: something approaching 50%. Our goal is to maintain that our market share at that level (and our number one position).
Also, we do see this market growing significantly, as more end users realize that they can easily build a high performance system themselves. We launched the Value Select line of products approximately a year and a half ago and are already gaining significant traction in this segment. Our value modules meet all the requirements of state of the art computers and motherboards. They are designed with affordability in mind rather than overclocking specifications (although many users do and can overclock these products successfully). Value Select modules reach a much broader market, of which we have single-digit market share. It is now our largest in terms of units sold, with huge growth potential.
We are wholly dependant on modules to end customers or system integrators and do not offer OEM modules, nor do we resell chips, which, is a substantial part of many other module makers’ revenues.
Q: Corsair positions itself as a memory module maker but it also sells flash cards, cooling solutions, etc. What is the sales breakdown by application for Corsair currently? How will the proportion change throughout 2005?
A: Last year, we launched two new product lines, our ‘COOL’ line of watercooling products and our flash products, led by our ‘Flash Voyager’ USB drive.
The new products are expected to represent approximately 10% of our sales in 2005. However, the flash drive and card market is forecast to be substantially larger than the DRAM module market in the future, so we certainly plan to invest more in this segment. I wouldn’t be surprised to see flash sales account for 25% of our business in 2006.
The Flash Voyager USB drive has been a tremendous success in the first three months since it was launched, and we are very optimistic about the sales potential from the segment.
In addition, the watercooling products are aimed at enthusiasts. Most high-end performance machines will eventually use water cooling as a standard option. In fact, it is already becoming a standard in many systems built in Japan.
Q: It was recently reported that Taiwan DRAM module makers received strong orders prior to CeBIT 2005. Faced with price competition from the Taiwanese companies, how will Corsair stay competitive? What is your competitive edge? Who are your major competitors?
A: We also saw very strong orders during the first quarter and had record sales despite a huge decline in ASPs (average selling prices). I don’t really think the competitive landscape has changed much for us although we do recognize that Taiwanese companies are growing at the expense of low value added US suppliers. The key to competitiveness is to have real value added and consistently bring good solutions and service to customers. Our strength is in our brand, which has strong recognition, as we always pay attention to product performance and quality. Gamers and hardware enthusiasts love Corsair and love the performance our products give them. They also love our service and technical support where we help them to achieve high overclocking results on their systems. In fact, we consistently win independent polls that ask questions to these types of customers about their memory brand preference.
In the end user segment, we don’t see much change in the major competitive brand situation except for the fact that we appear to be steadily gaining market share. I suppose we watch Kingston and Crucial more than anyone else, although there are some specialist module companies that we look at. In terms of price competition, many of our value products use Taiwan made chips so we have equivalent cost points to Taiwanese companies.
Q: Do you source your DRAM chips from more than one company? If so, who are your major suppliers? Will having various DRAM suppliers make it more difficult to stay compatible with your memory module products?
A: We use many different chips in our products. For our XMS (overclocking) products where the chip selection is critical, once we have picked a chip for a particular product (usually the fastest we can find), we won’t change that chip unless we are forced to (for example, if it goes out of production). In those cases we are ruthless about requalifying and maintaining the same specifications and performance levels.
Our customers like the fact that, unlike many of our competitors, we send the same modules with the same chips to review sites and magazines as we sell (through the channel) to end users. Therefore, they can buy exactly what they see reviewed and enjoy exactly the same overclocking performance. Many of our XMS products use special chips that have been modified by the manufacturers for us. For example, the Samsung ‘tccd’ chip was the result of collaboration between Corsair and Samsung Electronics.
For the value products, we generally qualify several chips for compatibility. The same is true for flash. Approximately half our supply comes from Samsung and Micron Technology and the other half is from various Taiwanese fabs.
Q: How about the packaging side? Corsair said its modules are precision-assembled at its Fremont, CA facility. What is your current capacity? Do you have other packaging partners? If not, are you considering outsourcing to other makers, such as packaging companies from Taiwan?
A: We actually have several partners in the US and in Taiwan who assemble modules for us, besides our own facility in Fremont. Most XMS products require substantial extra testing and processing to guarantee the overclocking capability; therefore, we do that in Fremont. For the products that use chips from Taiwan, we try to assemble those in Taiwan.
As we get bigger, we are also looking at where we manufacture compared to where we sell. It doesn’t make much sense, for example, to assemble chips from Taiwan in California when the modules are destined for the Asian market. Asia is currently one of our biggest growth markets.
Q: It was recently said that although Taiwan DRAM makers have been ramping up DDR2 production, they are seeing their inventory building up, as demand has not picked up as expected. How will this market trend affect Corsair’s strategy for this year?
A: DDR2 is an important technology for Corsair; we have been a very early adopter. In fact, the shipment proportion of our products based on DDR2 chips is substantially above the average for the module industry. Earlier this month, Nvidia announced that Corsair had been selected as the only performance memory partner for their new nForce4 SLI motherboard chipset, which supports Intel CPUs and DDR2 technology. We developed a new special low latency product for them. The new product, designated with the suffix ‘5400UL’, has been overclocked to over 1.0Ghz in independent review labs. The new chipsets like this from NVIDIA and Intel, coupled with our new low latency DDR2 product, will really pick up the usage rate of DDR2 compared to DDR1 in the enthusiast market.
From a pricing point of view, we expect DDR and DDR2 to achieve price parity by year-end. As the platform continues to mature and DDR2 prices come down, I believe we will see a large market uptake. Of course, if and when AMD adopts the DDR2 standard, the demand will increase even further.
Corsair CEO Andy Paul has 27 years of experience in semiconductor and electronics marketing and sales – 20 years of that in the memory industry. He started Corsair Memory in 1994 – and has served as president and CEO since its inception. Before founding Corsair Memory, Paul, in cooperation with Cypress Semiconductor, started Multichip Technology, a module company, which he later sold to Cypress. Paul started his career at Fairchild Semiconductor where he was responsible for marketing their “FAST” logic products. Andy Paul is a British Citizen and graduated from City University, London, with an honors degree in Physics and Electronics.
Company president and CEO Andy Paul
Photo: company
Corsair DDR memory module wins validation from Nvidia: Left and right, Andy Paul, president and CEO of Corsair, Drew Henry, senior director of platform products at Nvidia
Photo: Corsair
Article edited by Carrie Yu
