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Technology Stocks : Rambus (RMBS) - Eagle or Penguin
RMBS 101.61+2.8%Dec 5 9:30 AM EST
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To: Dave B who wrote (73496)5/23/2001 1:21:03 AM
From: Sun Tzu  Read Replies (2) of 93625
 
It is a well known economic principle that in the long run the price of any commodity is the cost of its production. In case of DRAM, this principle manifests itself in an interesting way; In the early stages, supply is below demand and the product is quite profitable. As more and more producers jump on the band wagon, the price drops to its cost of production. However, the inevitable underestimation of industrywide capacity to produce as well as the cyclical nature of the business, brings the price of the most mature segments well below cost. At which point anyone who has not already jumped on the next-hot-segment will do so and the cycle repeats.

This is not particular to DRAM industry; all commodity producers (e.g. steel, copper, etc) go through the same cycle. However, other commodities tend to have higher life cycles as well as some temporary venues for the producers to constrain the supply (major mining companies for example try to buy out the new reserves in order to prevent them coming online quickly). Unfortunately for DRAM makers, the life cycle is too short and it is hard to control the supply.

Sun Tzu

PS Carl, I believe the reason NVDA uses DDR has more to do with faster access time than anything else. If I recall correctly, the bus is too slow to take full advantage higher bandwidths.
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