Exactly. Allow me to repeat from your post:
the bottom line is this: The WORST thing that you can do for cost is to restrict production.
So why is Korea restricting production? The Koreans did it once before, and it helped them briefly, but helped MU much more, and cost the Korean firms in the end. They should have learned, but here they go again. Why?
My explanation is that the Korean DRAM producers are out of money. They can't compete on costs. They can't buy new equipment. The ASP is below their costs. They can't get the cost below the ASP, and they can't survive with the ASP below their costs. Thus they must get the ASP above their costs, even if only short term, or they must close. Thus they are restricting production enough to get prices up enough for them to survive. But as you point out, "it isn't a long term solution". By the end of the year, other fabs will double production (and halve costs). Thus prices will begin to fall again, and the Korean DRAM makers will be dead if they haven't reduced costs as well.
I think the end is near. By the end of the year we will know who are the winners and who are the losers. My prediction is that MU wins, the Korean DRAM makers lose.
Carl |
