Rest of Break out:
Bertrand: We don't need to invest a penny. In model the ASP is single biggest unknown. How quickly it's going to come up how quickly we can create a ????. ...
Q: Risk Samsung. Bertrand: You can not isolate NOR and NAND and DRAM. Idea of three independant memories, no this is all corrected. DRAM front: Building humongous factories. NAND (prices) are crushed. Look at product margin. Not sustainable. Look at Samsung. Pressure phones. They're not going to be in a mood to drive prices down easily for NOR. Segment was already under pressure. Recession will put so much pressure on the mem segment to a point that it will show unsustainable. You can speculate, 1q, 2q, doesn't matter. Our strategy: Go through that phase. Cut cost. Cut capital. We don't care anymore what strategy... What we care about: We need to be there in 6 months. That's what we tell our guys: 6 months, or not. SP1 is fine. Running 45nm equivalents up there. Can run 10k wafers/m. Gives us a wafer cross that's lower than 200mm equivalents. Is it the right level, no, but we're going to get there.
Q: ? Dario: ?? Fab1 at 300mm is now a die cost advantage compared to our competitors even if only at 65nm. ... Credit. Although we do have one big opportunity 250m of outstanding .. on the Japan facility. A B worth of assets. Enough for There's a scenario where we can upside?? that facility and perhaps delay ammortisation. Not really US finances, although GE is in the facility for 20%. Mostly nationals like mitsui, mitsubishi. Liquidity is tight in Japan as well, but not as bad as here.
Q: ? Dario: We're talking to traditional banks, leasing companies (like GE). Leasing guys seem ok lending a bit, some financing. I do think there's an opportunity for one bit of financing and that is in Japan. Not counting on it.
Q: Bertrand: It's simple. One big customer. They're shutting down big portion of december. Big car maker 5w shut down in q1. So customer talking to us: It doesn't matter the price, but we shut down minimize risk and we put everything on hold. So cutting die prices is not doing anything. So we don't cut price and we're waiting for them. Inventory in flash is very low. We think there might be an opportunity that they'll get short. Then we'll be able to do the opposite. Raise price. Rather than make q4 look good. We're not doing any price cuts. We now just stop discussions and wait for them to come back in jan. Main stream phone that use NOR are selling well. High end with NAND is not. Now, automative is dead. Not counting on it in q1. Other segments like gaming business in Japan with ?Pachinko?, 100m last year, same this year. Even in current environment people in Japan want to have a fun, good Pachinko business. We have in books nice upside for q1, some segments good, some not.
Dario: Inventory end 07 because of transition away from foundry and into SP1. Then up to 128d. It's going be be down to a 100m. Bertrand: Need 1q lead time. 90 days is good, less is outstanding. Right now on high side, but it's good inventory. It might save input costs next months. Dario: It's going to come down to 100d. We're still spending slightly over 90m/q on foundry. We continue to cut foundry. We have a lot of cost cutting still to do. Btw everything is variable when you have a long time horizon. When we shut down factory first consumption of vacation days, after that unpaid. Unpaid is bad but they still have a job.
Bertrand: There's ..MOU that has been signed in October. Moving to definitive agreement (dec/jan). Between now and the earning call. Then after 4w we get the cash. So q1.
Q: Bertrand: Today packaging we do everything in house. Last year at one point 40% of outsourcing. Productivity enhancement plan we managed to eliminate need outsourcing. Right now still improving efficiency in headcount. In range of 125 people / quarter. Even in house make improvements.
Q: Outsourcing. Bertrand: Typically in house is 25% cheaper. Reason why we're not selling the whole facility to ASC is because we want strategic supplier agreement. ASC is going to migrate volume production into the asset in such a way that the absolute unit cost goes down. We expect cheaper procurement than in house. So far the strategy is positive to margin. Obviously we've been debating with Dario. Shut down factory is negative on margin. From cash it's positive though. However we're making progress on margin in...
Q: Licensing. Why do you think you're going to be succesful when others failed. Bertrand: First look at what we filed. Level of infringement by Samsung was just momentum. They're infringing the basic. We've literally evidence. But also they created their own IP citing our inventions as prior art. Strange. Usually you don't do that. They're doing things that totally birating our IPs. Way licensing business. You need to have a stick and go to up to one of those guys and make a point. If you don't do that than others are going to presume you're an easy prey. The way to do it is to pick a fight and win it. And I tink we have a very very strong case. We're going to win it. We don't think Samsung can wait 15 months. And at that point I think we'll see friendly licencing. You have to pick the fight to get respected. ...
Q: Assuming you're correct. Argument that they're come back aggressive to force because you have the need for cash. Bertrand: Maybe they believe to get it on the cheap by going fast. We believe they're worth a lot of money. But in current environment matter of assessment.
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Can't understand parts of it in one/two goes.. Not going to spend the time.
Regards,
Rink |
