Analysis: 2005 a bad memory for DDR2

This was supposed to be the year that a speedier new DRAM (dynamic RAM) technology moved into the mainstream: a technology that could lower power consumption while increasing data speeds. But the technology, DDR2 (double data rate), failed to make the grade, due largely to a lack of acceptance among desktop PC users.

The fact that DDR2 didn't hit the numbers to be dubbed the mainstream, or most widely used DRAM chip, doesn't mean it never will. It's expected to become the mainstream chip next year. But its lack of acceptance in the market this year will likely slow the pace of improvement in DRAM technology.

The next generation, DDR3, probably won't move into PCs until 2007, despite the fact a type of DDR3 is already being paired with high-end graphics chips inside game consoles, said Joyce Yang, a manager at DRAMeXchange Technology Inc., an online memory chip clearinghouse.

Users probably didn't notice any blips in desktop performance. The old workhorse and current reigning DRAM market leader, 256Mb DDR chips that run at 400MHz, or DDR-400, maintained its leading share of the global DRAM market in 2005, and it's probably a good thing for users, since they only missed out on getting a little performance bump earlier -- and at a price some analysts said wasn't really worth it anyway.

The type of DDR2 DRAM that has been flogged on the desktop market for most of this year didn't offer a significant performance boost over the current mainstream chip, DDR-400. DDR 2 just didn't offer enough of a boost to justify its higher price, said James Huang, a chip industry analyst at SinoPac Securities in Taipei.

"The frequency is the main point," Huang said. "At 400MHz and 533MHz, DDR2 isn't significantly better [than DDR-400] for desktops. At 667MHz, DDR2 will probably become more attractive to people."

In notebook PCs, DDR2 won the lion's share of the market because its power-saving qualities lengthened battery life. But for desktop users, power efficiency isn't important enough to justify the extra cost, Huang said.

DRAM makers contributed to DDR2's inability to become mainstream in 2005 by offering users only a 512Mb DDR2 chip running at 533MHz, instead of a less expensive 256Mb version. Although higher-end desktops made use of DDR2, most desktop purchases have been for lower-end PCs, where price tends to count more than performance, said Crystal Lee, an industry analyst at ABN AMRO Asia in Taipei.

Desktops are the key battleground for market supremacy among DRAM chips. DDR2 has already taken over as the main DRAM for servers and notebooks, but because it has failed to win over desktop users, it might not become the industry's mainstream chip until the second quarter of 2006, said Eric Tang, a vice president at Taiwanese DRAM maker Powerchip Semiconductor.

Powerchip Semiconductor has pushed back its plans to increase DDR2 output, mainly because slow adoption of the chip among desktop users has pushed its price down.

The price PC makers pay for DDR-400 has dropped by almost half this year, to $2.39 per chip in the second half of October, according to DRAMeXchange, an online memory chip clearinghouse. Over the same period, prices for DDR-533 fell by nearly 61 percent, to $4.53.