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Technology Stocks : Semi Equipment Analysis

SOXX 270.83

+1.0%

Nov 21 4:00 PM EST

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To: Sam who wrote (78786)	1/29/2018 5:52:54 PM
From: Elroy	Read Replies (2) of 95456

Their incentive today is to keep prices as high as they can in order to injure their mobile competition. I'd bet the Samsung chip divisions makes the decisions that are best for the chip division without much regard for the device division. I can't prove it, but I'm pretty sure that's how most conglomerates are run. The memory department isn't too concerned about profits in the cell phone department. If Samsung fails to overinvest to gain share in memory (hard to believe) then MU and SK will overinvest to gain share from Samsung. Samsung isn't stupid, they won't allow that to happen. The next 5-10 years will see a dramatic rise in demand for both DRAM and NAND and, IMHO, it will be difficult for companies to keep up with that demand Why? They can see the demand future better than anyone here. If DRAM today is phenomenally profitable, then they want to get as much of that future DRAM demand as possible, even if it is at half of today's profit margin. So they invest a lot today in production facilities that will deliver product 2-3 years from now. If demand is expected to be so high, they just invest more capital. If they don't, their competitors will. This is true of any highly profitable manufactured product. It's basic business. Prices for memory are high now because production is low. So the makers will increase production volumes. Unless you can give some explanation arguing that they cannot increase production volumes (why not?) they will. As for cheap cash, all the memory makers are producing cash hand over fist. Access to cash today is no problem (I think).

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