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Technology Stocks : Micron Only Forum
MU 223.79+7.9%Nov 24 3:59 PM EST
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To: Carl R. who wrote (45581)5/4/1999 9:55:00 AM
From: Steve Robinett  Read Replies (2) of 53903
 
Carl,
You comment that like the game "prisoner's dilemma", each DRAM producer optimizes their own profit by ordering equipment, while all are better off if none order equipment. In the absence of conspiratorial agreements they will each order equipment, even though they are all worse off as a result.

Not quite. The problem is not that chip makers are maximizing their profit in a perpetual zero sum game but that declining prices for their goods are forcing them to reduce costs or die. If all the producers did enter your "conspiratorial agreement" and quite buying equipment to increase yield, the market would force all but the financially strongest out of business. The last fab standing would own the market. IOW, producers have to upgrade equipment or go out of business.

Best,
--Steve

BTW, as of this morning, the lowest street price on 64megs of PC100 DRAM is $44 and falling about $2/day
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