Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Rambus (RMBS) - Eagle or Penguin -- Ignore unavailable to you. Want to Upgrade?

To: Zeev Hed who wrote (37622)	2/28/2000 1:28:00 PM
From: Don Green	Respond to of 93625

DRAM Prices Continue Their Free Fall (02/28/00, 8:18 a.m. ET) By Jack Robertson, Electronic Buyers' News A survey of aftermarket resellers indicates spot-market prices are threatening to crash through the $4 level, bringing glad tidings to OEM buyers and countervailing potential misfortune to DRAM suppliers. Mainstay 8X8 PC100 64-Mbit SDRAMs were listing on the spot market for as little as $4.50 last week, with no end to the free fall in sight, according to observers. OEM contract prices took a dive as well, although 64-Mbit PC100 parts have generally not dipped much below $6, sources said. In a scene all too familiar to the industry's memory-IC vendors, the trend could eventually carry DRAM prices below manufacturing costs, according to Victor de Dios, an analyst at de Dios & Associates, Newark, Calif. "There's just too much inventory in the channel that must be burned off before prices bottom out," de Dios said. "The major DRAM manufacturers have reduced their production costs to under $4 [for 64-Mbit SDRAMs]. That's where they'll hit their pain threshold and [will] have to cut production to stop the pricing free fall." A spokeswoman for Micron Technology, Boise, Idaho, said the memory-chip maker "is cautious right now" in its assessment of the DRAM market. "We don't have enough data yet to judge how long the downturn will continue and when prices will turn around," she said. Bob Eminian, vice president of marketing at Samsung Semiconductor, San Jose, said the company is sitting on less than two weeks of inventory, but warned that some DRAM makers "have four to six weeks of inventory on hand. We won't see any turnaround until that inventory is depleted." Eminian estimated that it will take until the second quarter before some balance is restored to the supply/demand equation. Observers pointed to several factors flattening DRAM prices just months after OEM buyers were spending more than $20 for 64-Mbit chips on the spot market. For de Dios, the reason for the collapse is obvious: "There's no big demand, and supply continues to escalate. "The scarcity of [Intel] processors caused the white-box PC manufacturers to ship fewer units than they planned," reducing their demand for DRAM, de Dios added. However, he believes major PC OEMs were able to get the processor supply they needed from Intel, with their slackened DRAM orders a result of the traditional first-half PC slowdown. Some contend OEMs are disposing of large excess stocks that accumulated when Y2K supply disruptions failed to materialize. Jonathan Joseph, an analyst at Salomon Smith Barney, San Francisco, added that DRAM demand increased in 1998 and early 1999 when PC makers doubled the amount of memory shipping in their low-end systems from 32 to 64 Mbytes. With another doubling in the large, low-cost market unlikely in the near future, DRAM demand has fallen into a trough, he said. Plummeting DRAM prices may set up the next big boost in PC-memory density as OEMs are once again enticed by low chip costs into raising the DRAM content of their sub-$1,000 PCs to 128 Mbytes.