Zeev, I definitely underestimate the impact on Japan and Europe sales, as I do not understand why this opens the door. Yes, an Italian fab might be able to avoid the surtax the ECU has placed on foreign DRAM, but it does nothing to make the price anything less than a loss. And Japan is swamped with DRAM they want to ship overseas.
My basic thought is, if you lose money on each DRAM you produce, buying more production capacity, even for a bailout loan, may just bury you sooner. So far, all the extra DRAM capacity Mu has added over the past two years has eaten cash like Godzilla at a power plant. If DRAM goes to a profit next year, this deal will work out. If it does not, they just have more liabilities and one more creditor to potentially pull the plug on their life support system. The deal does nothing to get MU into the part of the market, the leading edge products, where profits are occasionally posted at least temporarily. They remain a technological stalking horse.
MB |
