The memory manufacturing industry is consolidating after a disappointing year of plummeting prices, reflecting reduced demand

Toshiba today announced plans to stop manufacturing memory chips. It will sell Dominion Semiconductor, a US subsidiary, to memory manufacturer Micron Technology in January, and will wind-down DRAM (dynamic random access memory) production at its Japan-based plant.

Toshiba had a 6.2 per cent share of the world DRAM market in 2000, according to estimates from market research company Dataquest. Toshiba will continue to produce some embedded-memory technologies, however, particularly for embedded devices.

The decision reflects how the floundering memory market has depressed prices to below manufacturing cost levels. This means Toshiba, and almost all DRAM makers, are losing money on every chip they sell.

Micron's purchase takes it closer to the top position in the DRAM market. This is currently held by Samsung Electronics, which had 21.1 per cent market share in 2000 (Dataquest). Micron was ranked second with 18.9 per cent.

However, market volatility over the last year, and Micron's purchase of only Toshiba's US operations makes it hard to estimate which company holds first place in the market.

The consolidation of the market also extends to Hynix Semiconductor, which has been hovering on the edge of bankruptcy for some time. Micron officials are discussing a "possible strategic alliance or other transaction" with Hynix. They visited the company last month.

Other high-profile players have already revealed they're set to withdraw from the memory market. Earlier this year, NEC announced plans to end DRAM production by 2004. NEC's operations will be transferred to Elpida Memory, a joint venture formed with Hitachi to insulate the two companies from market swings.