MU reports on Tuesday after the close. DRAM price fixing concerns despite lowered earnings estimates due to falling DRAM prices may help us towards a short term bottom. I just don't see how MU can come up with good forward guidance right now:
DRAM probe widens as product prices fall in Q2 amid weak demand
siliconstrategies.com
By Mark LaPedus
Semiconductor Business News
(06/20/02 09:22 a.m. EST)
SAN JOSE -- Amid a sudden drop in memory prices, the U.S. Department of Justice here has widened its investigation over alleged “anticompetitive practices” among leading DRAM makers.
South Korea's Hynix Semiconductor Inc. late on Wednesday confirmed that its U.S. subsidiary received a subpoena from the U.S Justice Department, as part of a major investigation over alleged price fixing among leading memory vendors.
Reports also surfaced that Japan's Elpida Memory Inc. has also received a subpoena. Elpida is a joint DRAM venture between NEC Corp and Hitachi Ltd. And two Taiwan DRAM makers-- Nanya Technologies Corp. and Winbond Electronics Corp.--were also added to the list, according to sources.
On Monday, three major DRAM makers--including Infineon Technologies AG, Micron Technology Inc., and Samsung Electronics Co. Ltd.--also confirmed that they had separately received subpoenas from the U.S. Justice Department over similar matters (see June 19 story ).
The investigation reportedly revolves around an alleged effort among suppliers to influence or fix DRAM product prices. Some charge that major DRAM makers have formed what could be a loosely-organized “cartel” to set or fix product prices amid the downturn in the semiconductor market.
The DRAM makers listed in the investigation said they are cooperating with the U.S. Justice Department and denied the alleged charges.
Today, Samsung issued a release on the matter. On Monday, Samsung's U.S. chip arm, Samsung Semiconductor Inc. (SSI), was served with a subpoena from the U.S. Justice Department, according to the company. The subpoena asks for certain documents and other records related to DRAM products.
The subpoena does not implicate SSI, and SSI is not a target of the investigation, the company claimed. In fact, SSI is in full compliance with U.S. laws, it said.
Upon receipt of the subpoena, SSI said it immediately took action to preserve all required documents and other records, and will be cooperating with the U.S. Department of Justice in providing the requested information.
For months, however, rumors have been running rampant in Asia concerning price fixing maneuvers among DRAM makers. Some observers believe that major DRAM have conspired to fix prices, reportedly in a move to squeeze out some of the weaker players from Korea, namely Hynix, and possibly Taiwan, including Nanya, according to observers.
Still some analysts believe there is still no real hard evidence that DRAM makers have fixed prices. “I haven't heard of any evidence from the OEMs,” said Brian Matas, vice president of market research at IC Insights Inc., a Scottsdale, Ariz.-based research firm. “If there was any price fixing, it wouldn't make any sense right now, given that DRAM prices are so low,” Matas said.
After a horrific year in 2001, the DRAM industry saw a slight recovery in the first quarter of 2002, he said. “The DRAM makers were getting killed in the business last year, but prices picked up in the first quarter of 2002,” he said.
The average selling price for a 128-megabit SDRAMs jumped from $1.70 in the fourth quarter of 2001, to $3.75-$3.0 in the first quarter of this year, he said.
But the typical summer lull has hit the PC industry, which is bad news for DRAM makers. “We've seen a cooling off in the market,” he said. “DRAM prices are back down in the $2.50 range.” |
