Tom, Of course MU is trying to delay crossover, as they are nowhere in 64 Mbit production. But they would not lower prices on purpose. Every 25 cents in DRAM price, at current levels, costs them about a nickle in cash flow. They can't afford to give up any cash.
Basically, I see their strategy as follows: They just don't have the cash or the brain power to keep up with the state of the art in the industry. Therefore, they try to produce the previous generation as efficiently as possible, not getting to full production until the major firms have already shifted their attention to the state of the art. That allows them to scrounge some of the table scraps that are inevitable for a couple of quarters before their products become marginal and they go through another barely profitable, barely at a loss scenario for several quarters.
Every now and then, DRAM gets tight and MU's strategy pays off big until capacity comes on stream again. So, what you have is a company that is marginal, barely hanging on until the next shortage. Artificial shortages, like the DRAM scams and the anti-dumping scams, have helped them survive so far. But they walk the edge of extinction every year and, IMHO, it is only a matter of time before they fall or merge into a richer company. Their DRAM strategy is simply not a long term solution. Only a product as good as Microstamp was supposed to be can save them. I don't think they will make it longer term in DRAM.
So, that is my 2 cents worth on their strategy, which suckered in a lot of folks during the high times of 1994 and 1995, and fooled them last year when they took an artificial holding back of inventory and a legal shenanigan as a "recovery." Actually, now we are recovering to MU's normal earning power, down near breakeven, not falling from the norm.
So, like the scorpion who stings, boosting production in the last generation chip is just what Mu does. They can't do anything else, even if they knew how. And it is Russian Roulette. MB |
