Sharing risks and widening resource base by building up partnerships
An estimated 52 billion megabytes of data are generated worldwide each day - and this figure is rising. This flood of data demands ever-increasing memory capacity, both of the network infrastructure and of the terminals processing the data. The performance offered by application and operating system software is constantly increasing, also enabled by greater memory capacities. Infineon develops semiconductor memory components for a wide variety of data processing and distribution devices.
The DRAM (Dynamic Random Access Memory) chip is deployed in all computers, from the PDA to the notebook and PC all the way to the mainframe. Yet more and more memory volume is also required for compact, batteryoperated devices, such as mobile phones, since they are no longer just used for making calls, but increasingly for the reception and local processing of data.
Business situation
The main pillar of revenues in the Memory Products business group is the DRAM, which is largely standardized throughout the industry and therefore subject to tough competition. Representing 60 to 70 percent of the market, the major share of worldwide DRAM production is absorbed by the computing segment - which includes workstations, desktop and notebook PCs. The remainder goes to less price-sensitive markets, such as servers and routers acting as nodes in networks, as well as consumer electronics, telecommunications and PC peripherals.
Recent years have seen a drop in the number of DRAM suppliers, not least due to the tough competition, and the market has consolidated. In the 2003 calendar year the top 5 DRAM suppliers had a market share of over 80 percent, ten years ago it was nearly 50 percent.
Strategic orientation
Innovation and flexibility are the pivotal requirements for securing profitable growth in the competitive environment prevailing in the memory products market. Infineon's state-of-the-art production technologies make it possible for the company to significantly cut memory production costs year by year. In the last financial year, a major part of the production capacities was shifted to feature sizes of 110 nanometers. We have also created new capacities in the 300-millimeter technology - where Infineon continues to play a pioneering role. This, too, affords potential for more cost-effective memory production. We thus ensure our ability to continuously increase productivity in the manufacturing of memory components by approximately 30 percent each year.
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Cooperation will continue to be an item on the business group's agenda to expand its capacities and develop new products and processes, an approach allowing risks and costs to be shared and minimized and opening up a wider resource and financial base for projects.
There is also an ongoing drive in the Memory Products business group towards gearing its product portfolio to higher-margin market segments. As compared with standard memories, they achieve higher prices and are less subject to market fluctuations. These products include application-specific and customized DRAM products, such as server modules or power-saving specialty memories for mobile devices. This is aimed at reducing the volatility of the business as a whole and rounding off the product range at system level. Infineon is successfully using this approach in the mobile phone business: we not only develop a large part of the platform of a mobile phone ourselves, but also provide a corresponding range of memories.