Mr. PAi-
Let me introduce myself as the EAB referenced, actually you can call me "Z". You seem knowledgeable, but certainly have a narrow source of information IMO. BTW, I have spent years in this biz, and I will remind you that you have no idea who I really am, so I emplore you not to emotionally respond.
Before I get started, I should disclose that I have a net long position in MU which is partially hedged through covered calls rotating in upward spreads over the months.
I will also agree that we are setting up for a DRAM shortage in 2000, but I'm sorry, not in 1999 until people build inventory for y2k.
You claim that Hyundai/LG is behind and cannot compete on the leading edge. Do not be deceived by surface analysis and sources from Japan. While LG is probably third in the Korean 3 as far as advanced tech, and Samsung is #1, they all have 0.25-micron fully qualified and moving smaller. Samsung has 0.20 qualified. My company contacts at each place Samsung, and the combined Hyundai/LG, spending slightly more in 98 than MU. While LG will spend less than $100 million in 99, the combined Hyundai/LG will spend between $800-900 million. This number is roughly par with Samsung and MU. How can they afford it, you might ask? The DRAM market is cash flow positive right now...
Do I believe there will be fallout from Hyundai/LG? ... yes.
Say goodbye to Wales. Close a couple fabs which made little difference anyway. Hyundai/LG will be one of the resulting top 5 survivors - the government will make sure in the end.
MU is and always has been ahead of the pack in shrinks, and is the low cost producer. I agree with your premise of an industry shakeout in 99, and this will set the stage for next year. In the meantime, while the trend is up and I am riding it on MU stock, fundamentals will catch up and a sizable correction is ahead of us this year. At which time, I will be buying for a target price of $160-180 by mid-01.
Z |
