Yousef, I have to admit, I get a little scared when I see "Mr. Short-Term DRAM price" calling for a price drop <g>
Here's one possible scenario:
In looking at why prices might fall, I'd start w/ why they've shown recovery across some configurations.
IMHO, the precipitous drop in Dec. may have been largely tied to liquidation of inventory driven by the need to raise cash to pay creditors. So maybe you call that a form of a temporary supply shock.
Now a month later, the effects of that "supply shock" have moved in the other direction, as have some prices.
On top of that, we get:
1) some of the Taiwanese players halting production for the New Year,
2) possible problems with the Koreans in securing materials,
3) a Japanese player slowing (if not shutting down?) production,
4) and another accelerating the shift towards the 64's.
Assume these factors are reflected in current pricing to varying degrees.
If 1, 2, and 3 are removed (i.e. the Taiwanese resume production, the Koreans are able to resolve their problems securing materials, and the Japanese player resumes production), maybe that adds up to a different supply/demand equation a month from now.
Just one potential scenario.
From a strategic POV, there's a difference between the effects of any production slowdown/halt now v. last August. I'm under the impression that one of the reasons the halts didn't "work" back then (at least not for very long, as from what I remember there was a dramatic pop in pricing right around the very end of July/early-Aug. that just didn't stick) was that a major U.S.player, MU, stepped in to fill in any temporary vacuum. This time, if you believe what Kip Bedard was reported to have said at the Monty Conf., they're a little tighter in terms of capacity as a result of the test issues. How serious this is, and how much it reduces their ability to once again up production to fill in any temporary vacuum - I don't know.
Back in Aug. MU seemed to signal to its competitors "hey, you guys stop production we'll step in". Now maybe their Asian competitors realize that their ability could be limited, and maybe you think, "alright, does that have any impact on how these guys react from here on in". I'd say given their pressing financial needs, my guess is "not much".
Who knows?
Good trading,
Tom
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