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

To: The Prophet who wrote (72637)	5/12/2001 6:06:03 AM
From: Bilow	Read Replies (1) \| Respond to of 93625

Hi The Prophet; What's actually happening with Samsung, RDRAM, and DDR, just so you can have me later tell you "I told you so": Early this year, Samsung was planning on producing 90 million 128Mbit DDR chips, and only around 70 million 128Mbit RDRAM chips in 2001. Their production estimates for RDRAM have gone up, and their estimates for DDR have gone down. (For example, they were supposed to produce 18 million DDR chips this quarter, but only 9 million RDRAM chips. Now they say they're hardly making any DDR chips.) The reason for this is that the other memory makers aren't making enough RDRAM, and so Samsung is producing a larger fraction of the world supply than they had planned. In addition to that, since SDRAM prices dropped through the floor, every memory maker who can has shifted SDRAM chips to DDR chips. This is because spot market pricing for DDR is well above spot pricing for SDRAM. (The usual Rambus fanatic hogwash that DDR doesn't have a market is belied by the presence of a spot market for the stuff, currently with around a 60% premium of equivalent SDRAM chips. It's RDRAM which is not traded in a spot market.) For example, Nanya (a DRAM maker that is neither sued nor licensed by Rambus by the way), had originally planned to be making less than 3 million DDR chips this quarter. They ended up producing 3 million in April alone. If they keep that up all quarter, it would account for half of Samsung's reduction in DDR production, but Nanya's a tiny company. The other big change was that Micron executed their plan to drive DDR prices down to "PC133 levels". (Of course their claim to get DDR to SDRAM pricing levels is actually hogwash [or at the very least a severe exaggeration], just as is Samsung's attesting that RDRAM is going to get cheap by the end of the year, but Micron did drive the spot market premium for DDR over SDRAM from the 200% level where it had hovered since the beginning of the year, to the 59% it's currently at. See #reply-15770894 for numbers and links. Incidentally, Micron is probably the world's most efficient producer of both SDRAM and DDR, in addition to being a large volume producer, so this is something that only they could do.) The result of all this is that DDR suddenly became much less profitable for Samsung than RDRAM, so they switched production over to RDRAM. This is all completely to be expected. Samsung is the world's most efficient manufacturer of RDRAM. It is very natural that they would take over world production of the stuff, and shift DDR over to the companies that (for one reason or another) don't want to deal with RDRAM. Samsung also has another motivation for putting out press releases hyping RDRAM. Since they are the most efficient manufacturer of the stuff, any move the market makes towards more acceptance of RDRAM benefits Samsung at the expense of the other memory makers. And there is one more mind game that the memory makers play with each other (and us), and that's faking their production plans. If a memory maker wants its competition to not produce a lot of something, they will say that they are planning on producing huge volumes of it. This is the normal condition, everybody knows they do it, but they still do it anyway. The inflated numbers are a threat more than anything else, and it will tend, all things being equal, to cause the other makers to shift production to something that will likely be more profitable. So if the memory maker wants something to drop in price due to overproduction, they will tend to give out signals that they're really not going to make enough of it. And then there's the lawsuits. Suffice it to say that the memory makers are not your buddy, and their information should be taken with a big grain of salt. The memory makers are not supposed to collude with regard to pricing, but they do keep track of each other's planned production, and that's all about keeping prices high for the consumer. In a way, it's sort of like the oil situation, in that there are just a bit more producers of memory than would make an easy near monopoly. Micron has a history of spoiling memory pricing, and they got accused of it again this year. -- Carl

To: The Prophet who wrote (72637)	5/12/2001 6:14:47 AM
From: Bilow	Read Replies (2) \| Respond to of 93625

Hi The Prophet; Re who to believe about RDRAM, me or Samsung... The previous post gave the view of the memory market from someone who watches it a bit from the inside. This post is largely a collection of Samsung's previous predictions. Like I mentioned before, when the memory makers make a prediction, it almost always turns out to be in error on the liberal side. That is, they predict big ramps up that aren't as big, prices decline but not as much as they said, etc. But the real issue here is whether you should believe the latest prognostications from Samsung. In a sense, the thread's already beaten this horse to death, but it used to be Jim Handy at Dataquest who's figures were worshipped by the Rambus followers. Dataquest repeatedly predicted that RDRAM would eventually be the mainstream memory type, but they kept having to reduce the near term figures. Finally, early this year, they admitted that DDR and RDRAM are running neck and neck for 2001. Now that Dataquest has abandoned you guys, you are quoting Samsung. Okay. I have a much larger collection of busted Dataquest predictions than Samsung, but I don't mind digging up some Samsung quotes for you. Samsung has been putting out pump estimates for RDRAM production and pricing promises for many years. That you believe their latest PR is a sign that you simply don't know this industry well enough to know who and what to believe. If Samsung really knew that RDRAM pricing was going to drop to SDRAM pricing later this year they'd be doing the same thing Micron is doing with DDR -- offering to sell it based on contracts written that way. (The sad fact is that all the memory makers pump their estimates in press releases. So do the industry pundits in their published estimates, for that matter. Memory conversions never happen as quickly as they say they are going to, and pricing never drops as fast either. That's why I'm charting 256MB DIMMs, by the time either DDR or RDRAM reaches SDRAM pricing the 128MB modules will be, by definition, obsolete, since the 128MB SDRAM DIMMs already are too cheap to bother with.) Here's Samsung proving that DDR production for graphics is huge: Sep 29, 2000 Samsung Unveils the World's Fastest Graphics Memory Chip Demand for graphics memory is skyrocketing along with the explosive growth of the Internet and the use of multimedia products that include moving pictures. Samsung Electronics expects sales of its high-speed 500Mbps 128M DDR SDRAM to surpass US$700 million next year. samsungelectronics.com Here's Samsung saying that their new DDR 512Mb chips are going to be 60% cheaper to produce than current chips: Feb 9, 2001 Samsung Secures Technology for 4Gb DRAM Samsung selected the 16-bit data input/output structure and integrated the design technology of double data rate (DDR) and single data rate (SDR) chips. Samsung officials say that applying the new 0.10-micron design rule to the 256Mb and 128Mb DRAM chips currently under production will lower production costs by at least 60%. Thus, the company will secure a stronger price competitiveness in the marketplace. samsungelectronics.com Here are some Samsung quotes from long enough ago that you can check them against what actually happened: EE-Times, April 22, 1999 Samsung said it expects the RDRAM market to account for 50 percent, or $13.5 billion, of DRAM sales by 2001. eetimes.com bloomberg, ptnewell, mishedlo, September 7, 2000 Samsung has been steadily upping its own RDRAM production. In its most recent estimate, just about two weeks ago, Samsung stated that: "Samsung estimates 7% of the total DRAM market will be RDRAM in 2000, increasing to 15-20% in 2001"." #reply-14343741 By November 14th, 2000, when Samsung had to cut down their estimate for 2000 from the 7.0% quoted above to just 5.5% (i.e. $1.7 billion / $30 billion). That's right. They lost one fifth of their year's production estimate in a bit over 9 weeks, LOL: samsungelectronics.com -- Carl

To: The Prophet who wrote (72637)	5/12/2001 10:04:28 AM
From: Win Smith	Respond to of 93625

Funny, TP, you left out this little nugget from that article. The main problem with RDRAM technology has never been its performance, but its price tag. Analyst Garber said that current prices for a 144-Mbit RDRAM chip running at 800 MHz are in the $22 range, a big premium over the $5 price tag of a 128-Mbit SDRAM chip running at 133 MHz. "It's still very, very expensive," she said. Who's taking a bath on those $80 128meg RIMMs on pricewatch, it's hard to say. Somehow, I doubt if there's enough of them around to keep Mikey stocked up, though, I imagine he's stuck flogging the $22 parts.

To: The Prophet who wrote (72637)	8/17/2001 2:48:20 PM
From: Bilow	Respond to of 93625

Hi The Prophet; Back on May 12, you wrote: "Hmm, let's see...... 1. Bilow: RDRAM will never come within 36% of the cost of DDR. 2. Samsung's Hughes said that the prices for RDRAM will be dropping significantly throughout the rest of the year. "By the end of 2001, there will be no price differential between RDRAM and DDR DRAM," he said. "We are really interested in moving both technologies into the mainstream." At the moment he said that Samsung is shipping between five and 10 times as many RDRAM chips as DDR DRAMs, although that figure fluctuates monthly. eetimes.com Now, which of these two persons is more likely in the know..... I bet on Bilow, especially given his extensive track record." #reply-15791301 Now, as it turned out, Samsung is cutting back on their RDRAM production (see #reply-16216720) and is ramping their DDR to 20% of production: samsung.com I know you're glad that you bet on me rather than on Samsung, and would like to thank me for explaining to you the facts about the industry that beginners like you are unable to see. Just think! If you'd bet on those Samsung press releases and kept RMBS, you'd be staring at $7.32 per share right now! -- Carl P.S. BWAHAHAHAHAHA!!! BWAHAHAHAHAHAHA!!! Oh, man, you are such a joke!!!