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Technology Stocks : Advanced Micro Devices - Moderated (AMD) -- Ignore unavailable to you. Want to Upgrade?

To: niceguy767 who wrote (30902)	3/8/2001 10:43:15 PM
From: Bill Jackson	Read Replies (2) \| Respond to of 275872

ng, When there is a shortage those that have stock are king. they can get many times the normal price for their products. Normally producers like AMD increase their prices to list price to their distributors, and may up the list price as well. The distributors them sell to their clients at all levels at whatever contract price the user agrees to. bear in mind that a product will be designed with samples and assessed by marketing and then priced by manufacturing and discueed with their own customer base. They then decide how many to make. This may be as short as a few months to over a year. they then know what parts they need and when they need them and the buyers line up all the parts, boards, flash, cases, line cords etc. If they are experienced these parts buyers will have a knowledge of what parts need to be scheduled far in advance and are in a shortage sisuation(like flash is now) and what parts are easy to get. As usual parts in short supply can go up in price dramatically. Some parts are available from many suppliers(as equivalents my different manufacturers) and some are sole source. It is a complex game of scheduling, pert charts, MS project or other SW is used. When I was buying parts and a shortage occurred(as was common with many TTL and other parts in the 80's) I would look for every part I needed and I would also buy parts I knew were in short supply in the hopes a horse trade situation would develop and I could trade parts that someone else needed for parts I needed. We all played this game. Making it more complex there were parts 'scalpers' out there as well. They would look for situations where their engineers would tell them that a shortage of such and such a part would develop in 8 months. they would then book orders for those parts and buy them and put them on the shelf and go looking for some poor guy who needed them and sell him that 20 cents TTL part for $40, or some such price. There are hundreds of these parts scalpers and they are extremely useful to someone like me who bought a lot of parts. I would tell them I had 20,000 74LS244 and needed 20,000 74LS245(these are octal buffers and at one time were in very short supply). They would have all kinds of clients looking for assorted parts and they would see what they had and see if they could get me my parts and make a buck with the ones I had. Often I guessed right and I could get my parts and make a good amount of money as well. Sometimes not, but it was a very interesting time, and I usually did a lot better than those people who did not plan ahead. Now regular producers hate these parts scalpers as they distort the market with their extra orders since those extra orders are all cancelled once the shortage is gone. In addition in short times all the true users make duplicate orders of short parts and they cancel them as well once the shortage is over. The situation shifts from shortage to glut in hours and that is why you get these wide swings in the spot market. As for monopoly in flash. It may seem that there are many flash makers and no monopoly, but the processes vary from maker to maker and this results in ssituations where they can only use an AMD parts or an Intel parts. These parts both have the same specs, but are not qquite the same and there is a specified preference for one maker. other parts are fully interchangeable and they can use parts from several makers. Reputable suppliers like AMD, FUJ, Intel etc book orders and sell parts in accordance with their liosted prices or on the basis of OEm contracts. They all know when the market is tight and the contract price drifts up to the list price in shortage times. In glut times it drops way down below list price. Bill