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Date: 19-06-15

Financial and IP capital shields big semiconductor memory manufacturers

DRAM and SRAM semiconductor memories are the basic inventions before the birth of complex CPU chips. When they were invented and over the time a lot of tech was patented. In today's market DRAM and SRAM manufacturing has become more of a capital intensive and process driven manufacturing rather than leveraging too much of any breakthrough innovation. The leading semiconductor memory manufacturers own range of IPs starting from basic SRAM cell to today's 3D memories and also have invested billions of dollars in building mega fabs to make memory chips. That gives huge advantage to the established semiconductor memory players over any new ventures.

With now China focusing and putting huge efforts in building a domestic semiconductor memory manufacturing capacity, there are lot of hurdles for China to cross before the establishment of huge memory manufacturing capacity.

For China, acquisition is a way of building capacity, recently a China-based investor SummitView Capital is in the process of acquiring ISSI, a not so big SRAM chip vendor based in US. But this acquisition may not succeed, due to Cypress Semiconductors' higher bid for ISSI. Well if this is one kind of hurdle. Any region which tried to enter into mass manufacturing of semiconductor memory to face the big hurdle of lack of intellectual property assets (in form patents or otherwise) related to semiconductor memory manufacturing. It's even more true for flash memory manufacturing.

We got to see, if China will become successful in facing all these hurdles in establishing semiconductor memory manufacturing base in China.

DRAMeXchange in its latest analysis said "expects China, with its huge war chest and immense home market, will enter the global semiconductor industry via DRAM manufacturing. However, the established players – Samsung, SK Hynix and Micron – control much of the intellectual property (IP) assets, creating a high entry barrier for newcomers. For the Chinese competitors, mergers and acquisitions are now the fastest way for them to catch up to the big three DRAM suppliers in IP development."

DRAMeXchange notes the partnership agreement between Intel and Spreadtrum is one such example. The acquisition of the U.S.-based Integrated Silicon Solutions Incorporated (ISSI) by SummitView Capital is another example quoted by DRAMeXchange.

Irrespective of Taiwan's very good capabilities in semiconductor manufacturing, Taiwan's semiconductor memory manufacturers still not able to compete with top semiconductor memory companies in Japan, South Korea and the US-based Micron. That tells semiconductor memory is tough zone to compete even for semiconductor manufacturing experts. The IP related court battles between Spansion and Macronix is well known story. Finally Spansion got acquired by Cypress Semiconductor.

Another threat is, the technology innovation in nonvolatile memory technologies is also going fast, Which may obsolete DRAM, SRAM, Flash altogether and replace with one memory device.

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