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Technology Stocks : Micron Only Forum
MU 258.46-2.0%3:59 PM EST
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To: A. A. LaFountain III who wrote (43920)3/17/1999 7:55:00 PM
From: PAinvestor   of 53903
 
Tad, Toshiba & Samsung had unprecedented internal B/B ratios of 2X at the beginning of this year. Their semiconductor divisions swung onto the black in late September last year. High end parts still remain in shortage. Industry capex as a percentage of revenues are below optimal levels (22-23%).

What we have brewing here is a major supply shortfall which has been been developing for sometime. Silicon cycles themselves are not caused by fluctuations in bit demand, rather bit supply, which is driven by capex plans of chip makers. That much we agree upon. Therefore the most crucial aspect to analyzing this industry has been the access to/understanding of what management intends to do with the funds they have. But this time you have to also take into account the difficulty in procurement of funds (remember that Korean semiconductor makers were effectively subsidized by their banking sector until last year) and advances in technology that are increasingly differentiating those chip makers that are competitive and those that are not (thus the belated recognition by the Taiwanese to act as foundries for the Japanese).

In addition, a simple Mb/PC & PC growth model to forecast bit demand growth will become increasingly irrelevant as non-PC DRAM applications (especially in the digital consumer electronics fields) take a larger share of the total pie. Just an indication, but Sony's incredible new Playstation 2 will have two 144Megs of RDRAM memory included when it is unveiled next year. They company plans to ship some 15m units in the first 18 months...
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