Larry, The probability is about 90% that the Japanese giants and, especially, the Taiwanese corporations, will take advantage of their superior financial conditions to make life very tough for the weak sisters, ala MU and the Koreans. The simple fact is, we are already in a huge supply glut and the big players have announced even more capacity coming on stream. 700-800 million 64 Mbit chips will be produced this year. 500-600 mm is the optimistic forecast for demand. Then, next year, all the 256 Mbit capacity comes on stream big time.
The question is, how do the weak sisters react, by scrounging for money or by ceding market share? Right now, Samsung is trying to build 256 Mbit chips in its current fabs. They are doing it, but I don't know what their yields look like. Hyundai is defending the DRAM operations by selling other money losing subs. Lucky Goldstar is cutting money losing subs. Micron is buying TXN fabs. Can these half measures keep up with the cos with truly deep pockets? Possible, but I'm not betting that way. I think by the end of 1999, we will see a two-tiered market in the first tier of DRAM producers. And MU will not be in the top half.
MB |
