Re <How do you justify your statement? Are, now, component prices going to rise <if ever..> ad finitum...>
I have explained my thoughts in previous posts, I'll do it again.
Dell's just in time inventory benefited greatly due to rapidly declining component prices. That has already stopped and WILL NOT continue going forward. That means Dell's extremely low inventory is not an advantage, maybe even a liability.
Currently fab utilization rate at 0.25 micron is very near 100%! (full production 24/7) This is very important to understand. As 0.35 and older fabs were outdated, they were only upgraded and not enough new fabs are being built to keep pace with rising demand. That means the only way to increase capacity is to built new fabs or upgrade to 0.18 or 300 MM wafers. Neither one can happen fast.
DRAM prices were artificially low due to over-capacity. Korean among others had overbuilt fabs financed with debt. They had to keep producing at a loss just to keep the fab going. They had Billion dollar fabs depreciating and they needed cash flow. DRAM prices among with many other semi based components continued to lower. Considering all the IMF finance reforms, we will not see another over-capacity like we had in recent years. Prices of DRAM and other components will not crash like they did.
Re < there is little evidence to suggest you are right on this account...Show us one analyst, article that states this is the case, please...>
There are mounds of information and links to justify what I said, if you are interested you can look them up. Listening to the CC from the likes of AMAT, NVLS and LRCX helps also. I find it a bit strange that analyst who follow likes of DELL and GTW know very little about semi, its cycles and fab capacity and its trends.
DRAM pricing did not sneak up on DELL, it was long time coming. Taiwan quake also had little to do with DRAM supplies, DRAMS DO NOT COME FROM TAIWAN.
I also do not know where you got your idea of "Dell's margin has risen over the last 2/3 yrs."...... Not correct.
Mani |
