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Strategies & Market Trends : MDA - Market Direction Analysis

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Dec 11 4:00 PM EST

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To: HairBall who started this subject	3/28/2001 11:04:20 PM
From: gfs_1999	of 99985

The Real Deal on DRAM Price Increases By Herb Greenberg Senior Columnist 3/28/01 10:05 AM ET Wednesday wallop: Chip chatter: All you seem to hear right now is that DRAM memory chip prices are rising. But are they really rising, or at least rising for the reasons you want to see chip prices rise? You already know the answer to this if you've been reading Mark Martinez's daily "Overnight DRAM Pricing" stories on TheStreet.com. But just in case you haven't been, all you need to know is that while prices are rising, they're not rising for reasons that should be helping any memory chipmaker. Brian Kritzer, research chief at Fechtor Detwiler in Boston -- whose firm is not long or short any DRAM maker -- says the trouble with chip prices is that they're being driven by externals like the impact of the Japanese earthquake on chip plants and a holdback in supply by chip makers (a la OPEC with oil) -- not by demand. "Suppliers are keeping product off the market. The trap in that is that the DRAM market is very volatile and (these price increases) are not sustainable on the upside," Kritzer says. Key to remember (next time you're tempted by Micron (MU:NYSE - news - boards)), he adds, is that two-thirds of all DRAMS go into PCs, and according to market research firm International Data Corp., PC sales fell last month by 24%, following a 29% decline in January. "When PCs are down 20%-plus, it's not good for anybody who supplies them." End of the memory chip story ... for now.

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