TO ALL, this thread ought to be re-named the Micron Bears Only Thread, for the bears seem to display little or no objectivity when dealing with information positive about micron (like increased market share or lower costs). For what it is worth, here is another bit of news from EBN that can be interpreted as bullish or bearish, depending on one's perspective.
It is, however, interesting to note the ideas about cross-over being somewhat consistent with what Micron had projected earlier (about significant cross over not occuring till 1998). Of course, the bears here will see this as more self-aggrandizing propaganda from Kurlak and his ilk, but the facts (and the stock price, thankfully) seem to indicate a bright future for MU if they play their cards right.
........Begin EBN article...........
64-Mbit prices drop below $39 -- OEMs enjoying the windfall, as Japanese, S.Koreans feel the pressure
By Jack Robertson
Prices of 64-Mbit DRAMs are continuing their tumble, prompting some to
question whether the memory industry's rapid shift to high-density parts is starting to backfire - from the point of view of suppliers.
The high-density chips slipped below $39 last week on the commodity
market, down from more than $44 on June 23, according to the American
IC Exchange, Aliso Viejo, Calif. That drop has been paced by a similar
decline in the 16-Mbit market, where prices have fallen an average of
$1.25 over the past month, putting them in the $6 to $8 range.
For suppliers, analysts say, the problem is that the South Korean and
Japanese memory makers jumped the gun. Eager to escape the price
bloodletting in low-density parts, they began producing too many 64-Mbit devices too soon, overwhelming what is essentially a niche market of high-performance workstations and servers. "The Asian/Japanese business model in DRAMs appears flawed," said Thomas Kurlak, investment analyst at Merrill Lynch & Co. Inc., New York. "They are pioneering into new higher densities prematurely."
Kurlak noted that according to Semiconductor Industry Association
estimates, 64-Mbit sales in 1997 will total only 50 million to 60 million units, while 16-Mbit DRAMs will top 2.25 billion. As a result, "Asia/Japan is aiming its best capacity at small markets and not running at full utilization, driving up their average unit cost," he said.
W. Keith McDonald, senior vice president of marketing at Samsung
Semiconductor Inc., San Jose, was out of town and couldn't be reached
for comment last week. Previously, in an interview, McDonald said that
Samsung is expecting a four-times price crossover to occur in the first quarter next year and that his company had doubled its original sales projections next year for the 64-Mbit chip to an output of 4 million units per month in 1998. He expected PC servers, personal workstations, and high-density memory modules to drive the 64-Mbit market beyond the current high-performance Unix workstation and graphics processor customer base.
Other major Japanese and South Korean memory makers could not be
reached for comment. Bob Harrison, market manager for MOS memory at Texas Instruments Inc., agreed that the 64-Mbit market has failed to develop as quickly as expected.
"A lot of people thought the migration to 64-meg would come as early as the second quarter of this year, but it didn't happen," Harrison said. And with the added pressure from falling 16-Mbit prices, "I don't think it will come in the third quarter either," he said.
Samsung Electronics Co. Ltd. and LG Semicon have said they will shut
down DRAM fabs for seven days this month, while Hyundai Electronics
Industries Co. Ltd. will close DRAM lines for nine days in August.
Some Japanese DRAM suppliers are following suit. Toshiba Corp. said it
will close DRAM fabs for a week's vacation. NEC Corp. is considering
shutting down for a week, while Fujitsu Ltd. says it will not close.
Micron Technology Inc. plans to continue running its vastly expanded
production lines without interruption. The Boise, Idaho-based
manufacturer has shot past Samsung to become the world's largest
DRAM producer.
Beneficiaries of the price declines could include Micron, IBM
Microsystems, and TI, which have used aggressive die shrinks to lower
their production costs, allowing them to sell 16-Mbit devices at highly competitive prices.
------- END EBN article -------------
It will be interesting to see how the bears view this. Can MU cut costs so low that they can continue making significant profits on 16 Mb devices while the japanese and koreans wait for the crossover?
Sridhar Srinivasan |
