Samsung Semiconductor announced on Monday that it has renewed its contract with Microsoft to supply memory chips for the company's Xbox game console, which contains 64MB of high-speed double-data rate (DDR) SDRAM.
Such long-term supply agreements are particularly valuable in the turbulent memory-chip industry, which saw manufacturers selling dynamic random access memory (DRAM) chips below cost for much of last year just to keep factories open.
Risto Puhakka, an analyst at semiconductor research firm VLSI Research, said that even though memory prices are starting to recover, it is to Samsung's advantage to lock in orders now.
"The long-term contracts present a number of benefits in that suppliers can plan much more efficiently," he said. "You're not in the position of dealing entirely with the spot market."
Microsoft has sold 1.5 million Xbox consoles from mid-November, to the end of 2001. Microsoft projects worldwide shipments of 4 million to 6 million units for its 2002 fiscal year, which ends June 30.
News source: CNet News
