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Technology Stocks : Micron Only Forum

MU 266.70

+7.3%

1:58 PM EST

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To: DJBEINO who wrote (49029)	10/6/1999 7:52:00 PM
From: Ed Beers	Read Replies (2) of 53903

I think the origins of the SDRAM shortage are now clear. A substantial piece of the total capacity was diverted to produce RDRAM. Normally this wouldn't have had a significant impact since RDRAM machines would have displaced SDRAM machines reducing the demand for SDRAM. Total xDRAM would have remained about constant. When the box manufacturers realized they had a problem, they went out and bought up the entire remaining supply of SDRAM. These would all have been big players and they probably bought on a contract basis. The spot market supply vanished and prices soared. It would be interesting to see a graph of spot market volume rather than price. This scenario raises a few questions: Who is eating the RDRAM, the RAM vendors or did their contracts allow them to stick it to the box makers? How fast will capacity return to SDRAM production? I assume that all wafer starts are now SDRAM and I don't believe that the total cycle is really 6 weeks. Will the RDRAM problems get resolved and will that resolution cause a glut as large as the current shortage? Will the existing RDRAM inventory have to be scrapped?

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