Why wouldn't we see the same situation as DRAMs, where Japan and Korea built too many DRAM factories, and sank prices ?
It takes an expensive, complex factory and skilled people to make DRAMs - but when there is too much capacity, the price erodes.
The people who buy DRAMs like HP for printers, Nvidia for graphics boards - benefit from the lower prices without having to significantly cut their own prices.
Looking at Charter Semicondutor of Singapore, which was supposed to be a clone of TSMC and UMC -it has had a hard term making money.
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I would expect that a Gap Stores, Macy's and others who have good real estate locations, house brands, deals with brands like Tommy Hilfiger, and advertising budgets, would be able to make much more profit selling shirts than the hundreds of companies making shirts.
Longer term, to you expect some of the factories to build their on brands, retail locations, etc. to capture additonal margin ?
Honda went from making piston rings, to motors for bicycles, to motorcycles, and now cars.
From the consumer back, Nike started selling European shoes out of a car trunk, then sourced from Korea, then Indonesia, and now a dozen places.
Do you see starting at one end of the chain having an advantage over starting at the other end ? |
