Component prices to fall again? This should appease some of the concerns that people have about DELL right now?
Herb on TheStreet: Are DRAM Prices (and
Micron) About Ready to Take a Hit?
By Herb Greenberg
Senior Columnist
11/13/98 6:30 AM ET
Prices of DRAM memory chips, as well as the stock of memory chip maker
Micron (MU:NYSE) and the chip-equipment makers, could get whacked in
coming weeks as Korean chip makers come off a self-imposed slowdown by
flooding the market with product.
The Korea Herald, which is largely overlooked by U.S. investors, reported
yesterday that Samsung Electronics, Hyundai Electronics and LG
Semicon -- Korea's big three chipmakers -- have resumed full production in
response to a steady climb in the price of 64-megabit chips. The new
supply of chips should hit the market within four weeks, just as the industry
goes into a slowdown.
Chips prices rose from around $7.50 in June to roughly $10 today on fears
of a shortage, thanks in part to the Korean slowdown. Micron, in fact, has
been saying that its chips are on allocation. And the rising chip prices
have been a key factor behind the doubling of Micron's stock in the past
two months.
With demand and supply coming back into sync, according to the
newspaper, the Koreans figured it was time to rev up their fabs, which had
been operating only three weeks every month. Merrill Lynch analyst Paul
Kim on Thursday warned of falling DRAM prices.
Micron officials couldn't be reached, but one analyst that has talked to the
company says its response was that it is sold out for the rest of the year.
With more supply coming online, one thing seems clear: It won't be sold
out for very long. |
