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To: Earlie who wrote (86978)	3/28/2001 2:26:29 PM
From: yard_man	Respond to of 436258

I wonder if this wasn't what gave a little downward jolt a few minutes ago ...

To: Earlie who wrote (86978)	3/28/2001 4:36:30 PM
From: Les H	Respond to of 436258

interesting stuff from another forum: CREDIT SUISSE FIRST BOSTON CORPORATION Feb Qtr Recap Micron reported its semiconductor revenue in its February quarter reached over $1 billion and was slightly profitable. Though full results will not be available until early next week, the semiconductor data released beat our estimates owing primarily to higher than anticipated bit growth of 30% sequentially (versus our estimate of flat). The company noted that business began to pick up in the month of February and has remained at those levels thus far into March. Accordingly we estimate inventory levels have retracted to around 4 to 5 weeks, down from over 8 weeks earlier in the quarter. The company's communications customers are currently in an over-inventory, position. DRAM prices having dropped 80% from September '00 through February '01, and the market was primed for any sort of stabilizing or upward catalyst. With high inventory levels at virtually every leading manufacturer the market was ready to accelerate on any news. During tough market conditions, DRAM makers are incentivized to release product into the channel at the end of their fiscal quarters in order to help the company's respective financial performance for that quarter. Needless to say, Micron's February quarter was an extremely challenging quarter of managing very soft demand, ramping a new advanced manufacturing process 0.15 micron (in managing buffer inventory in the channel against it's own internal inventory). As one would expect, it appeared that the company was releasing product into the channel during the last few weeks of February. At the time, spot prices for 128Mb chips dipped into the $3.80 range. With the end of February, it appeared that Micron decreased its shipping of product directly into the spot market. Almost in direct tandem at the time, Hyundai's US operations appeared to default on a $57 million dollar loan and reports began to immediately spread that the company was going to be forced to start scaling back part and or eventually all of its DRAM operation. There is no question that Hyundai's exiting the business would go a long way towards curing the oversupply currently afflicting the DRAM market. Accordingly, virtually all DRAM channel participants began to speculate that this was the case and activity levels skyrocketed. Inventory levels began to fly off of every producer's shelf. On March 8th and 9th, the spot prices for mainstream 128Mb parts spiked from the $3.60 to the $3.70 range up to as high as $4.40. With DRAM prices having declined so drastically over the previous six months it appeared as if the market was willing to accept anything as a reason or cause to stimulate business. Accordingly, it appears that DRAM manufacturers took note and began to artificially hold product off of the market in their attempts to further drive up prices or at least offer stability at a higher price. This worked for several days and seemingly artificially supported prices for that period of time. Once the realization hit the marketplace, however, that Hyundai was indeed going nowhere in the near term, the fervor left the marketplace once again. Over the next week, activity levels dropped once again. And though prices remained at a relatively higher level in the $4.10 range, most in the channel remained skeptical that the uptick was the result of the presence of true demand (rather than a lack of supply), nor that we were looking at a sustainable recovery in the near term. Recall the DRAM market experienced the speculative sort of action and subsequent short term price jumps in early October and again in early December. Prices have fallen 69% from October's rally and 46% from December's rally. We are not wholly discounting the recent pickup. In fact over the last several days, our channel checks are finding some modest activity levels and price ranges have moved up to around $4.20. Checks do reveal that several large OEMs have recently come in and ordered a modestly higher level of product. It does appear that inventory levels at DRAM manufacturers have accordingly been drawn down. We remain skeptical however as to whether or not that DRAM inventory has found a home at a consumer or is actually sitting in inventory in another form at a module manufacturer or once again, at an OEM. In addition to the end of Micron's fiscal quarter, the report of Hyundai's exiting the business, and what appears to be large manufacturers intents to withhold product, there have been several material supply side trends that would lead the market to pick up in demand and pricing in the near term. Indeed Samsung and most Japanese manufacturers (Toshiba, NEC, Mitsubishi) continue to divert a larger percentage of their DRAM production towards RDRAM (which has roughly a 25% larger die size). Effectively taking away capacity towards the markets current mainstream SDRAM product. This in itself we believe could reduce global supply by 2% to 4% this year. As DDR systems begin to ramp, a similar effect could take place as manufacturers shift capacity away from mainstream SDRAM. We have seen this very recently at Nanya. On the demand side, we are obviously very interested in some promotions (ie double your memory per box), which some OEMs are claiming. On the broad scale, however, most of our very recent checks at major OEM websites and local newspapers have not revealed boxes overflowing with memory. Indeed, several major mainstream desktop lines are still coming stock with 64Mb of memory per box. In addition, in this market, it does not appear that PC consumers are being pushed over the critical purchase (or weight) decision by another 128Mb of memory for a reduced rate or even free. When and if prices begin to appreciate we have no doubt that no OEM plans to continue with this sort of promotion or to leave these systems as stocked as they are promotionally trying to stimulate currently. What we obviously need then is a material reacceleration of end market demand. Intel, Compaq and Gateway's recent preannouncements and recent motherboard and chipset anecdotes suggest that things could be once again softening heading into the second quarter. We remain skeptical that this will occur in the near term. Though a marginally decreased landscape, coupled with both material and artificial supply side controls can stimulate demand and prices in the near term. We believe it will be difficult to ultimately lead to a long term recovery. However, the only thing that is for certain in the DRAM world is change. It is feasible to believe that the DRAM market could be the best leading indicator for the entire health of the PC industry. Stay tuned. CREDIT SUISSE FIRST BOSTON CORPORATION