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Politics : Formerly About Applied Materials
AMAT 295.83+4.1%Jan 6 3:59 PM EST
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To: 16yearcycle who wrote (10350)11/5/1997 10:47:00 PM
From: davesd  Read Replies (2) of 70976
 
Eugene, you said..." I fail to see the point of your continued posts about falling chip prices.
Have you heard of Moore's Law? You know very well that prices will be falling forever.So, really, what is the deal?"

Well lets see what Morgan thought about falling DRAM prices in 1996....these are out of the past press releases.

"The semiconductor industry is going through a period of significant transition with respect to reduced fab capacity investment and sharply lower memory pricing," said James C. Morgan"

"We are cautiously optimistic that memory device prices and inventory levels are stabilizing in our customers' business," said James C. Morgan"

"In addition, the impact of pricing changes on memory devices has caused some customers to slow investment plans from prior expectations."

It's one thing when prices fall because the fabs are getting more efficient, it another thing when they have no market to sell their product into. The ASP for DRAM last quarter was $6.50...DRAM is now selling for about $3.70....That's a 43% drop in one quarter!! Usually DRAM drops 30% in one year not per quarter.

Anyways...it's hard for me to believe that any company is making money in DRAM today, especially in 16M DRAM. Analysts have estimated that MU's cost of production is about $4 per chip and the Asians is about $4.50 to $5 per chip....And my point is why add more capacity (be it advanced technology) to make a widget that is in huge oversupply and you can't sell at cost. DRAM is 40% of semicap sales.

dave
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