They have to increase capex spending as they are upgrading their equipment to move to smaller nodes. It should be noted that they aren't adding new wafer starts. And it should also be noted that Inotera sells all of its output to Micron, and between them, Inotera and Nanya have something like a 7 or 8 percent market share in DRAM. One of the most important ways in which This Time is Different is that Samsung, Micron and Hynix account for more than 90% of the DRAM market. There aren't a dozen companies all adding capacity and many of which have access to low cost loans through banks that are backed and run by their governments.
I posted a piece from DRAMeXchange a couple of days ago on Don's thread, here:
Message 29521860
Mobile is growing well, and PC DRAM is very profitable because Samsung, Hynix and Micron all want it to be so. No one else has any say in it, and none of the three Big Boys in DRAM are going to be starting a price war in order to gain market share--it would be idiotic to do so. If you want to believe that one of them will nonetheless be idiotic, feel free. IMHO, you will be proven wrong in the ripeness of time.
I don't see Micron as "struggling" very much in recent days, as they have set new 52 week highs for several days running. Does someone believe that that should continue forever? And those aren't just 52 week highs, they are 10-12 year highs.
Sandisk is about to have their annual Investors' Day, beginning in about half an hour. It is down sharply this morning ahead of the conference, a whole 1.3% or so. Down from all time highs. Micron is down, as I write, less than one half of one percent. There are a lot of nervous nellies out there who believe that This Time is NOT Different. IMHO, the only actual reason that they can point to for maintaining this view is that every time someone has said This time is different in the past is that it has never been different. They are not looking at the actual conditions on the ground, which is what is all important.
I don't think that either Micron and Sandisk are through hitting new highs. That doesn't mean that there won't be bouts of profit taking, of course there will be. But the biggest danger for them for the next couple of years is macro risk, IMHO. The companies and the sector are in good shape, as hard as that is to believe for those of us who have followed them for the last 15 years. |
