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Technology Stocks : Micron Only Forum

MU 207.36

+3.0%

Nov 21 9:30 AM EST

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To: Skeeter Bug who wrote (41850)	1/4/1999 5:37:00 PM
From: Carl R.	Read Replies (1) of 53903

skeeter, you write: mu better shell out the billions to get their too... [I presume you mean "there"] What the heck are you talking about? Do you think that there is some special equipment MU needs to buy in order to make 256Mbit chips? MU is using the most advanced equipment and techniques available. They just choose to apply it to reduce the cost of making current products rather than applying to to produce small quantities of next generation products. This is the fundamental point that MB missed and why MU has not gone to singe digits as he predicted. He believed that the fact that they were still making 4Mb chips when others were making 16Mb chips was a sign that MU had inferior technology. This was a reasonable interpretation, but it turned out to be wrong. MU had excellent technology, but applied it to reducing costs, so they were the low cost producer at 4Mb and could make money at 4Mb when others couldn't. You also say the ONLY reason i see for the koreans to aggressively go after 256 mb is a longer term strategy to tie up the lowest cost producer spots . It is true that with a head start on production, they will be the low cost producers for awhile. But just as their lead didn't last long at 16Mb, nor at 64Mb, it won't last long at 256Mb. Once a producer decides to begin volume production of a part it only takes a matter of months to get costs in line. Lets be serious here. The Koreans have excess capacity and are shutting down their fabs for a week a month again (according to MU conference call). Why not make some 256Mb parts with the extra wafers? Even if the yields are low and the parts are not particularly profitable it is better than not running at all. In my opinion the Koreans are beginning 256Mbit production early not out of strength, but out of weakness. Carl

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