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Technology Stocks : Micron Only Forum -- Ignore unavailable to you. Want to Upgrade?

To: FJB who wrote (52172)	2/16/2001 8:15:27 AM
From: DJBEINO	Read Replies (3) \| Respond to of 53903

Asia DRAM Report: Spot Prices Slide On Inventory Cuts By Dermot Doherty OF DOW JONES NEWSWIRES TAIPEI (Dow Jones)--Fears of a sharp reduction in inventory by leading makers of dynamic random access memory (DRAM) chips appeared to be confirmed this week as chip prices in Asia resumed their recent slide. The spot price of a 64MB DRAM chip has slipped to historic lows of roughly US$2.20 from US$2.50 last week, while 128MB chips have fallen to roughly US$4.30 from US$4.60 a piece. There had been signs that 64MB spot prices were bottoming out around the US$2.50 level, but industry experts said chipmakers - and U.S. chip giant Micron Technology Inc. (MU), in particular - are still having to digest large stockpiles of inventory. "With it being the end of the quarter for Micron, it's likely it will try to reduce inventory and that's putting pressure on prices," said Alfred Ying, semiconductor analyst and head of Taiwan research at BNP Paribas Peregrine Securities in Hong Kong. Moreover, end-of-year earnings announcements by Japanese companies, due out next month, are also expected to be preceded by heavy selling in the spot market, Ying said, making any rebound in the short-term unlikely. Those views were echoed at smaller DRAM makers in the region. "Prices have softened over the past week because of selling by Hyundai Electronics Industries Co. (Q.HEL) and Micron, which has been quite aggressive in the spot market with its quarter-end coming up," said the sales director at one DRAM maker in Taiwan who also pointed to heavy selling by Germany's Infineon Technologies AG (G.IFT). Expectations within the industry that 64MB DRAM prices could find support around US$2.50-US$3.00 were based on that level being the manufacturing cost of a chip. However, with no significant rebound in spot prices likely to come during the first half of 2001 due to weak PC demand and the threat from inventory levels still large, many chipmakers may now be drawing the line at the variable cost of US$1.50-US$2.00 per chip. Dan Heyler, head of regional semiconductor research at Merrill Lynch, estimates that DRAM makers are holding an average one to two months of inventory, with Micron at the top end of that range. "Spot prices will continue to fall as long as inventories are as high as they are," Heyler said, without providing an estimate of where spot prices will likely find support. In a research report issued this week, Merrill Lynch noted Micron has started offering its 128MB DRAM chips for US$4.50-US$4.80 a piece, sharply lower than its previous mid US$5.00 level. Still, Merrill also believes the short-term pain caused by such price-cutting and capital expenditure cuts may actually help the DRAM market over the long run. "News of Micron's more aggressive behavior, although negative for earnings over the short-term, may prove positive if it hastens the exit of weaker players from the DRAM market," it said in the report.