<< Fewer suppliers means higher prices!>>
I just can't sit by and read this "logic" without comment. How many fewer suppliers will there be, and when? How do you know that those fewer suppliers will be able to maintain price stability and prevent the entry of new suppliers/reopening of mothballed fabs.
History and basic economics tells us that any such effort would be short-lived. Of course, if it does happen, then there would be great profits for those investors who could predict it. Problem is, it ain't gonna happen, now or in the foreseeable future.
Your statement belies simple economic logic of commodity production oligopolies. The truth is that supply/demand imbalances are the one sure way to ensure new investment in production capacity and new price pressure. Think about it: if you and 24 friends can get together to corner the market on widgets, you invite new entrants, and maybe you are enticed to cheat just a bit on the pricing regime.
Now assume that you reduce the number of friends in the industry to 10. Have you solved your problem? Are the ten of you any more able to keep each other from cheating on your allotments? NO WAY SKIP!!!
If you can explain to me how the DRAM circle of friends could get down to 3 or 4, then maybe, just maybe they might eke out a windfall profit for half a year or so.
You need to read and think hard about what MB, SB and others say about this industry. If you are a trader, who cares. But if you are an investor, you ignore their reasoning at your peril!!
BWTFDIK |
