Tom, you have hit the nail on the head. This has always been the essence of MU's strategy, and the strategy has not always been appreciated by bears who thought that MU was a laggard. But the strategy is simple and can be paraphrased as "full speed ahead, and damn the torpedoes". MU will cut costs as fast as they can, and increase production as fast as they can, hoping to move ahead of the laggards. Woe be to those that fall behind.
The Korean's are also following this strategy, and will no doubt keep up so long as they continue to be able to come up with enough money. MU has enough cash on hand, and enough cash flow, to keep up this pace for at least 2-3 years without a cyclical recovery. I'm sure that if a cyclical recovery does not come before that time, that we will see additional people dropping out of the market. On the other hand, if a cyclical recovery does come, MU will be very, very profitable. I think Zeev's estimate of a 10% maximum for profit margin of a low cost producer in a cyclical recovery is very low.
MU will stay a low cost producer because they must. They will devote all their efforts to the DRAM business because it is essentially their only business, and they can't run away to another business. Will another cyclical recovery ever come? No doubt it will, probably next year or the year after. In the unlikely event that RDRAM takes over, a cyclical recovery will come sooner, rather than later.
Carl
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