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Technology Stocks : Cohu, Inc. (COHU) -- Ignore unavailable to you. Want to Upgrade?

To: Henry D who wrote (1424)	9/13/1999 12:29:00 AM
From: KLINVESTOR	Respond to of 7825

HenryD, From the same article it notes the 128 meg DRAM chip pricing as follows: <<But current trend defies such forecast. The price of 128M DRAM, which kept falling from around $40 early this year to $17 in late August, made an upturn inSeptember. It was being traded between $23 and $25 on the U.S. spot market Thursday. This is attributable to decreasing supply as chip makers are delaying the expansion of 128M DRAM production to benefit from current strength in the price of 64M DRAM. >> Normally you pay more proportionally for chips with more memory. For example, a 128m chip would cost more than double the 64 m chip. This is not always the case though and we may be entering a period like that. I suspect what happens is there are a lot of computer makers that are putting in a single 64 m chip so just because a 128m chip is proportionally cheaper they would not buy it because they do not want the added cost. Thus a shortage can occur at say the 64 m size but not the 128 m size. In regards to the spot pricing I am no expert although there have been a lot of news articles on it. I believe most of the large quality suppliers like Micron sell predominantly under contract terms. The contract prices are set monthly I believe although that can change based upon how erratic the market is. When prices are jumping rapidly like now Micron's average selling price is well below spot but when prices are dropping rapidly I suspect they are above the average selling price on the spot market. The key for these companies though is by having these longer term contracts they can be more assured of running their factories at a very high utilization rate. With the rapid jump in price it would seem that there will be new factories being started soon and or debottlenecking of current factories. That will most certainly drive demand for Cohu products. The next quarterly release will be interesting but more importantly it looks like we are in for a longer upturn that in 1997 when it ran out steam very quickly. Good luck to all.