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Technology Stocks : MEMC INT'L. (WFR -NYSE) The Sleeping Giant?
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To: Scotsman who wrote (3115)3/10/1998 9:57:00 AM
From: All Mtn Ski  Read Replies (2) of 4697
 
I asked MEMC about their Wafer pricing structure and their ability to raise prices and they sent me this reply (2/10/98):

Tom,


Historically, approximately 75% of our contracts have been on an
annual basis, 20% have been on a six month basis and the remainder have been spot business. When I use the term spot business, it refers to smaller semiconductor companies who typically order four, five and six inch wafers and are not under contract. Their specifications typically are not as stringent and they will call us and our competitors to obtain the best volume and price arrangement.


As you are aware, the Japanese market has historically repriced
silicon wafer contracts every six months, on October 1st and April
1st. The timing and length of our contracts is determined by our customers. The timing typically coincides with their fiscal year-end. The year and six month contract length has developed over time. Some customers push out contract negotiations or bring them in depending on certain factors going on within their own businesses. You must also be aware that these are not take or pay contracts. These are simply the pricing that we agree to at various volume levels.

MEMC has the ability to increase the price of silicon wafer "during the good times" when customers request a change (tighter) specification that requires additional cost on our part. So, we do have the ability to increase price when the wafer market is in better equilibrium.


Should you have additional questions, I would be happy to answer them.

Best regards,

Sam Duggan
Director, Investor Relations

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