November 28, 2011 - Two Asian DRAM makers are taking to the courts arguing patent infringement claims, amid a somber backdrop that has all DRAM players mulling serious measures, including even more production cutbacks.

Japan's Elpida Memory struck first, filing with the International Trade Commission (ITC) on Nov. 15 claiming Nanya is infringing seven of its US DRAM patents, and asking for an injunction against Nanya's imports. A similar filing on Nov. 16 in Taiwan addresses four of Elpida's DRAM patents there, also with a request to ban imports. (Earlier this fall Elpida filed a four-patent-infringement claim in the US, but efforts to resolve the issue have failed; "Nanya has no intention to fairly compensate Elpida for the use of Elpida's patents. As a result, Elpida decided to take additional necessary actions," stated Seiji Nakashima, VP of Elpida's IP group.)

A week later, Taiwan's Nanya Technology returned fire with its own complaint to the US ITC requesting an investigation of both Elpida and Kingston DRAM products, citing infringement of four of its own patents. The company "is evaluating its other options, including the filing of a patent infringement lawsuit in U.S. district court," stated Pei-Lin Pai, VP of global sales & marketing.

Local media points out that such patent infringement filings can often be just seeking leverage in licensing negotiations, as a way to untangle complex relationships involving similar or complementary technologies. One report, though, adds that Nanya's parent group Formosa Plastics may be "annoyed" at Elpida's insistence that Nanya refuses to negotiate in good faith.

But there are broader themes to this new round of litigation, points out the Taiwan Economic News. An industry once dominated by the Japanese (DRAM memory) now has taken root in Taiwan, and Nanya's countersuit exemplifies the growing confidence among domestic firms there in the technology and patents they have accumulated. The lawsuits also show that with the DRAM industry once again suffering oversupplies and rock-bottom prices, manufacturers will go to great lengths to gain competitive edge, including the courts.



Output reductions by DRAM chipmakers. (Source: Taiwan Economic News)


More significantly, they've already started reigning in production, too. The Taiwan Economic News calculates the recent cutbacks by four DRAM firms: Samsung has slashed commodity DRAM by 70%, Nanya and Inotera by 50%, and Powerchip by 80% -- for a combined 230,000-250,000 wafers/month, "around half of the industry's total output." And a fresh angle on DRAM sector woes is the Thai flooding that has devastated hard-drive suppliers, causing ripples of concern all up the PC chain -- including speculation of even lower demand for DRAM.

Elpida is considering yet another production adjustment, weeks after sending a bulk of its domestic manufacturing to Taiwanese partner Rexchip, the Nikkei reports. Spot prices for 1GB DRAM are now at $0.57, roughly -40% in the past six months, and Elpida just posted its worst half-year ever: a -¥56.7B group net loss April-September. And so, Elpida is plotting "a new strategy to fix the price nightmare: If customers keep clamoring for lower prices, it would be willing to reduce supply," according to the paper.