Micron Tech/Prices -2: Co. Can't Fully Explain Mkt Change
By Mark Boslet
SAN FRANCISCO (Dow Jones)--Micron Technology Inc. (MU) said it saw "some pickup" in DRAM memory prices in July after several years of steep declines.
Speaking at the BancAmerica Robertson Stephens Semiconductor Conference, Kipp A. Bedard, vice president of corporate affairs, said the past month has brought firmer prices to the market. DRAM chips are used to temporarily store programs and data when computers are turned on, and over the past several years, prices have fallen 95%.
The price pickup started with the company's high-performance 64-megabit chip that includes a 100 megabit bus, Bedard said. The product commands a premium and sells for a little above $9, he said.
The product also has a three-week lead, or ordering, period, indicating demand is strong.
But prices have firmed for 64-megabit products without the fast 100-megabit bus. In June, the 64-megabit DRAM product bottomed at $7.50 a piece. Now it sells for more than $8, he said.
Bedard went on to say he couldn't fully explain the change in the market, which over the past week has fueled a rise in Micron stock.
Swollen inventories of personal computers held by distributors were cleared by June, so computer makers are again ordering parts and revving up their factories, he said.
Meanwhile, computer makers often slow down parts orders toward the end of a quarter and probably did so at the end of the second quarter. Increased ordering is natural in July, Bedard said.
The firmer prices also appear to have drawn third-party brokers back into the market, so bidding for parts is greater, he said.
While these factors could mean the stronger pricing is temporary, the fact that it has lasted through all of July is a positive sign, he said.
Separately, Bedard said Micron expects by late September or early October to be producing more new-generation 64-megabit parts than older generation 16-megabit parts.
He also said 65% of the company's wafer starts are at 0.21-micron technology, a more advanced technique that will lead to lower costs.
Computer makers also expect to include more DRAM in their machines. The average machine now comes with 64-megabits of DRAM. That will climb to between 75 and 83 megabits at the end of the year, he said.
Some investors worry that strengthening DRAM prices will encourage Asian producers to restart idle fabs and again flood the market with products. However, much of that production uses older 0.35-micron technology and will not easily be able to produce advanced 64-megabit parts, he said. |
