Joe,
Obviously now that MU is 34, its a no brainer that I should have sold and took profits, but I really believe we have a much stronger DRAM shortage than one may think at least for now. I have the following Montgomery report that just came out that confirms continuing trends that favor strength in DRAM pricing. Of course Monday MU could go south, but I am willing to wait it out....good trading
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DRAM PRICING UPDATE
August 7, 1998 SEMICONDUCTORS
Jonathan Joseph (415) 627-2925
Claude Hazan (415) 627-2845 DJIA: 8598
S&P 500: 1089
NMSGI: 117
Firming Trend Continues
DRAM prices mostly up in the week. We found in our weekly survey that 64Mb 8Mx8 SDRAMs
rose another 5% on the week, while high-end 64 Mb PC-100s (100MHz) rose 1% and 16Mb SDRAMs were
flat. The less mainstream 16 Mb 4Mx4 EDO rose over 11% on the week. We believe the production
holidays out of Korea and recent fab shutdowns in Europe and the U.S. are making PC OEMs
increasingly concerned about supply as they continue to see stronger than expected demand in July and
early August. As a result, DRAM supplier lead times have stretched from off-the-shelf to six weeks over
the last two weeks and spot market prices for virtually add DRAM product have risen. Inventories
remain at very low levels, both at the supplier and buyer side, suggesting spot prices could move higher if
demand remains strong. Reports of accelerating demand are being supported by industry data, which
shows bit growth in June accelerated to 79%, up from 72% in April, according to the SIA. These trends
are not only a positive for our PC-oriented device companies, like Micron* (MU, $34-1/4, BUY) and
Intel* (INTC, $86-11/16, BUY), but are also probably a harbinger to come in the DSP and analog
segments, which include Texas Instruments (TXN, $63-13/16, BUY), Semtech* (SMTC, $16-3/8,
BUY) and Micrel* (MCRL, $35-7/8, BUY).
RECENT PC-66 DRAM PRICING
16 Mb 64 Mb
4Mx4 EDO 2Mx8 SDRAM 4Mx16 EDO 8Mx8 SDRAM
Price % Change Price % Change Price % Change Price % Change
8/7/98 $1.65 +11% $1.78 0% $8.64 0% $9.13 +5%
Source: NationsBanc Montgomery Securities LLC, American IC Exchange
RECENT PC-100 DRAM PRICING - 64MB
8Mx8 SDRAM 16Mx4 SDRAM
Price % Change Price % CHANGE
7/13/98 $9.50
7/17/98 $9.59 1%
7/24/98 $9.59 Flat
7/31/98 $9.59 Flat $9.80 Flat
8/7/98 $9.69 1% $9.80 Flat |
