Interesting article DJ, but why did you bolden the part about 16 Mbit prices not dropping further?? To highlight how wrong Nomura is? They're talking about $3.30 and current prices are $1.50-$2.00 ... say what?
Something else that looks out of whack is supply/demand. The article talks about demand for 3.4 billion DRAMs and supply of 3.69 billion. Doesn't look too bad. But armed with my trusty calculator and using the numbers for estimated unit production of 16 and 64 devices .... kerchung, kerchung .... I get megabit production of 79.5 billion units this year versus 44.0 billion last year, an 81% increase. I thought demand was growing like 40-50%. Maybe Windows 98 is supposed to up demand ... hey, but it's not gonna launch and even if it did most people don't expect it to be a big deal (including MSFT until very recently). So I get supply swamping demand, not just edging it out. And why does the situation improve in '99? Won't the wholehearted conversion to 64 Mbit just up megabits by a factor of 4 ... a simplistic analysis I agree ... uh let's see, the last sentences you boldened talked about demand increasing by 59% next year (5.4 billion units versus 3.4) and overtaking supply. Well if 64 production increases to 1.8 billion units from .8 billion this year and 16 drops by the same amount (to 0.77 billion from 1.77 billion), then megabit supply increases by 60% .. we have balance. Seems likely that 64 will ramp even faster because prices are so depressed that nobody, not even the mighty MUsky, can make money on 16 Mbit chips. So supply outpaces demand again in '99 ... hey maybe things turn around in '00 ... after all,
'it's only an inventory correction'
regards, Mike
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