| | | Sun Co-Founder Sells Secretive Hedge Fund on Radical Chip Trade
Alistair Barr
September 29, 2017, 12:20 pm September 29, 2017, 10:47 am
bloombergquint.com
(Bloomberg) -- Sun Microsystems co-founder Bill Joy recently joined Water Street Capital and has pushed the secretive hedge fund firm to build a large stake in Micron Technology Inc., arguing the market for its main product is set for a sustained boom without the wild ups and crushing downs of the past.
The rise of cloud computing, artificial intelligence, and augmented and virtual reality applications on Apple Inc. iPhones and other high-end smartphones will spur stronger demand for DRAM chips, Joy wrote in a recent memo to Water Street founder Gilchrist Berg and other executives at the firm.
DRAM supply is likely to fall well short of this demand as it becomes increasingly difficult and expensive to churn out more capable chips, and a smaller number of manufacturers behave more rationally to maintain profit, Joy added.
These arguments are well-known in the business, driving the spot price of these chips up more than 70 percent in the past year. What’s unusual is Joy’s conclusion that the market for dynamic random-access memory chips -- DRAM -- will no longer be whipsawed by oversupply and fluctuating demand.
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