Mark,
If the cost of materials is 80% of the cost of a drive (to assemble, I presume), then it becomes even more puzzling how these companies--especially the Koreans--can find the money to expand production. There were reports not long ago that their--Samsung and Hyundai--suppliers of silicon for chips were either reducing not granting credit at all to them for their materials. They had to pay cash up front for delivery. Now, perhaps that story wasn't correct, I don't know. All sorts of apocraphyl stories get started in times of crises.
Nevertheless, my previous question stands. Even if they get the money somehow for building plant (but who gives it to them?), where do they get the money to finance the actual production and the necessary inventory? Someone has to maintain inventory, and the OEMs are all trying to eliminate theirs, so its up to their suppliers. And, again, can their cost of production be so much lower than the erstwhile Big Three that they--the "lesser" ones--can be making money while ASPs are dwindling? Which bank is lending them money to expand in this sector? Why? Sorry, I must be missing something, but I don't get it. Stitch, Lawrence? Any ideas? |
