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To: Bharat H. Barai who wrote (48689)	9/26/1999 8:47:00 PM
From: Skeeter Bug	Respond to of 53903

bhb, pc unit growth is approaching 0%, which is exactly what i said. in other words, every year it gets closer and closer. a recent article posted on this thread quoted an analyst as saying that no matter how low consumer prices go, unit growth stays about flat. i suspect that unit growth goes up about 10% this year in the business and consumer markets (down from the 15% last year and heading toward 0%). is that enough to drive 100% increases in dram? maybe, maybe not. the bottom line is that mu's oem's have a problem. a severe problem. if they lower pc prices 10-15% per year and can only sell 10-15% more units (approx 0% rev growth), what do they do when their component costs go up? 1. they can lower prices 10-15% and take a HUGE hit in earnings due to drastically increased component costs. 2. they can keep pricing static, sell fewer units and take a HUGE hit to earnings due to drastically increased component costs.. 3. they can include less dram chips per box (64 mb goes to 32 mb). it takes 8 64 mb chips to make a 64 mb module. 84=$32. 820=$120. adding $88 to oem costs would wipe out nearly all the box makers' profits (it would wipe it all out and then some, but i'm being nice) in the sub $1k market (the biggest market out there!). if you were a box ceo, what would you do? 1, 2 or 3? how would that impact dram demand and mu? >>Skeeter be fair and open minded. You know lot about memory business. Just analyse it with fair and open mind.<< bhb, i always try to. i am bearish b/c i believe the facts dictate that is the place to be. your comment above has been shared before, but my negativism was the only place to be as it was right. we will see in 6 months whether my bearish attitude is correct... again! >>You will be lot more useful to the thread and all of us!<< bhb, i am far too rational to be useful in an irrational market. especially for predicting short term movements - the mo of choice for most folks on this thread. two key issues need to be resolved for mu to report consistent positive earnings (though they will still, most likely, have negative cash flow!). 1. lots and lots of supply has to be taken off line. i know some supply has been coverted. i doubt it is enough to make a difference b/c those markets they converted to are still exploding. if that significant dram capacity hit those markets in size then they would have a supply glut (small dram capacity is HUGE to these other markets b/c the market is many times greater). it could be that a lot of capacity was taken off line and that sparked this pop (and mu giving away 8 weeks of inventory helped, too). but that supply can, and will, come back on line quickly. 2. something has to greatly stimulate end user demand at a time when just about every circumstance dictates this won't happen (cpu speed is good enough for 98% of apps, the industry has been maturing, etc.). the next three months will be interesting. very interesting. this appears to be a great time for mu to stop the cash flow bleed for a little while.

To: Bharat H. Barai who wrote (48689)	9/26/1999 11:39:00 PM
From: Chas	Respond to of 53903

At $21+ MU could see more on the plus side tomorrow along with the conference/ -------------------- 64M DRAM price rises above $20 following quake in Taiwan The price of 64M DRAM (dynamic random access memory) chips surged above $20 Friday following the earthquake in Taiwan which hit the island's semiconductor production last week. According to industry sources, the 8M x 8 PC-100 chip, the current mainstay, was being traded between $19.65 and $21.25 on the U.S. spot market, up some $6 from $15.58 before the quake. The chip was quoted at $20.14 Thursday. It is the first time for the chip to break through the $20 level in recent years. The prices of 16M DRAM and 128M DRAM skyrocketed immediately after the tremor, but showed little change Friday. Analysts expect further price hikes of DRAM chips, as it is likely to take time for Taiwan to recover from the earthquake damage. Taiwanese firms account for up to 12 percent of the global DRAM chip supply. Updated: 09/27/1999