DRAM update from Lehman Brothers 3/13
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03/13/98 ~ 11:17 AM
Semiconductors: Weekly Chip Pricing Update.
A. Gumport, CFA 1(212)526-5368, T. Berg -5276
* DRAM PRICING DOWN FOR THE PAST WEEK.
DRAM PRICING CONTINUES TO HEAD SOUTH, WITH 64 MBIT DEVICES DOWN SHARPLY OVER THE PAST WEEK. 64 Mbit DRAM pricing continues to decline, and most 16 Mbit devices fell, too. Buyers still indicate 16 Mbit devices will have sufficient capacity for most applications, so 16 Mbits still account for most demand. Anecdotally, one trader indicated Samsung DRAMs, which typically have commanded a premium due to higher qua1ity, face heavy pressure from lower priced competitors as customers seem to favor price over quality more than in the past.
DURING THE PAST 24 HOURS, 2 WELL RESPECTED SOURCES INDICATED DRAM PRICES IN ASIA-PACIFIC HAVE MOVED TO $2.20-2.50 FOR 16 MBITS, DOWN 10-20% IN JUST THE PAST FEW DAYS. The negative DRAM pricing trend causes us to believe that our Feb. FY2Q98 $-0.24 MU EPS estimate is at best realistic (excluding 1-time items) and our $-0.18 May FY3098 estimate may be optimistic (includes $2.77 16 Mbit prices). Also, our $0.01 March FY4Q98 ALSC EPS estimate appears perhaps $0.05 optimistic (results are being cushioned by relatively strong demand from specialty graphics DRAMs, in which ALSC is strong).
DRAMS AICE
Price
64MBITS 3/12 3/5 2/26 2/13
Sync 4Mx16 $13.31 -17.8% -20.4% -28.7%
Sync 8Mx8 $14.03 -11.4% -13.8% -20.9%
Sync l6Mx4 $14.91 -13.5% -13.5% -36.5%
4MXl6EDO- 4K $12.91 -3.0% 0.9% -8.3%
8MX8 $13.85 -3.3% -1.6% -1.6%
16MX4EDO $12.91 -15.5% -12.7% -6.3%
16MX4 $14.02 0.0% 1.8% 1.8%
l6MBITS
SynclMxl6 $3.77 -7.7% -7.3% -15.1%
Sync 2Mx8 $2.72 -6.5% -6.5% -22.9%
Sync 4Mx4 $3.01 4.0% -8.9% -13.8%
1Mx16 EDO $2.76 -3.2% -5.2% -20.5%
1Mx16 $2.90 18.4% -3.8% -15.0%
2Mx8 EDO $2.76 0.0% -13.0% -17.0%
2Mx8 $2.81 0.0% -10.7% -16.4%
4Mx4 EDO $2.66 -10.2% -5.3% -22.3%
4Mx4 $2.72 -5.9% -11.3% -24.4%
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AS A RESULT, DESPITE OUR LONG TERM OPTIMISM ON THE MEMORY SECTOR, WE REMAIN CAUTIOUS SHORT TERM. We do expect demand to surpass supply well within the next year, but that clearly has not happened yet. Meanwhile, living through the losses can be painful.
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