Earlie, I think that your observations are correct in that respect. However, the impact on RMBS is minimal. When DRAM prices decline, MU may find itself not having sufficient gross margins to cover their burn rate. RMBS, however, have a very small burn rate and furthermore, will collect royalties whether the Dramurai make a lot or no money.
What RMBS long should be aware of, however, is that once the cries of trouble in DR(E)AM land are heard, investors will forget the business model of RMBS and throw the baby with the wash water.
Personally, I have expressed the opinion that the semi-equip have peaked, and the highs seen earlier this year will at best be matched but not exceeded (the chances are getting dimmer for matching). The chip makers will peak about two quarters later, IMTO. Shipments may continue to grow, but there will be pressure on margins and the growth rate will slow.
Some DRAM dreamers are forecasting a peak shipment in DRAMS at $60 Billion annually (in 2003 if memory serves), but I think that as usual, this number will be low, and actually, I would not be surprised if 2001 will not see increase in sales (increase in bits yes, but ASP will decline again) over this year.
Still, as far as the earnings model for RMBS, even a flat $30 B sales in DRAM, with other sectors contributing as well, will result in interesting YOY comparisons.
Zeev |
