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Technology Stocks : Micron Only Forum
MU 223.79+7.9%Nov 24 3:59 PM EST
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To: Knighty Tin who wrote (47121)7/15/1999 1:49:00 AM
From: Carl R.  Read Replies (2) of 53903
 
MIke, you wrote:
They are trying to pull an OPEC scam, but DRAM is not like oil.

You are right, it is not. The biggest problem that OPEC faces is that the cost to actually pump oil out of the ground is minimal, so a producer is always better off if they pump a little extra out, so long as they don't get caught. This makes oil production agreements unstable.

With DRAM however, cost is not not far from price these days. Thus when the price falls too far, the incentive to overproduce is no longer there. That is probably one reason for the spot price bounce, that there have been some production cutbacks or inventory hold backs. If an oligarchy formed in DRAM that conspired to fix prices, the agreements would be much more stable than they are for oil because of the higher production costs.

Carl
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