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: SBHX who wrote (72665)	5/12/2001 3:01:44 PM
From: The Prophet	Respond to of 93625

A lot to answer SbH, but I will try: 1. "In a sense, I guessed, once a fab ramps up, you want to run it non stop --- these bunny-suited guys are very very efficient. Hence a fab now making SDRAM, will likely still continue to supply them. But is the actual number of SDRAM being made increasing or falling? Seeing this 'recession' is about excess inventory, there is nothing indicating that SDR sdram inventory has been whittled down, so my statement is based on conjecture alone and the guess that SDR fabs are being changed to make DDR slowly is just a guess. I could be wrong." I do not know if you are right or wrong. But even if you are right, with a significant portion of the memory market now moved to RDRAM, even a stagnant unit volume of SDRAM will keep pricing pressure high because the the relevant demand for SDRAM is falling. In other words, flat sales of SDRAM in a falling SDRAM market is equivalent to rising sales of SDRAM in a flat SDRAM market. 2. "The analogy of oil and sdram has a few holes in there. My economic principles is rusty, but I'm going to try my hand at it anyway. <g> I believe that in studying supply and demand curves, there is the substitution effect, which roughly translates that as prices in a good that can act as a substitute changes, it changes the curve of the good being studied. Unless the timescale is long enough, there's no actual substitution effect for oil/gasoline. The design cycle for cars is much longer and to have cars retrofitted to run on natural GAS/hydrogen is not trivial. After decades, we still have not seen mass produced non gasoline vehicles. However, the design cycle for semiconductors seem to be in the range of months." Sorry, I missed your point here. 3. "I know you won't believe me when I say that to retrofit an existing fab producing SDRAM to make DDR-SDRAM instead incurs minimal costs, but this is true --- assuming you want to make equivalent parts from SDR-->DDR. What complicates this a bit is that the other side of Moore's law does play a part, and density has to increase just as the process technology has to decrease too. So even if it is possible to cheaply modify an SDRAM fab to make DDR, the technology may have moved on. But a fab now makes 7ns SDR (which is very very common) for PC133, to switch to 7ns DDR of the same size incurs very little incremental costs (except for downtime). Much of the same equipment can be reused. 7ns DDR could easily run as PC2100 --- it's the 3ns-4ns DDR (very expensive) that complicates it, but only the graphics guys need them." I concur that the cost to move to DDR is cheaper than to ramp up RDRAM. 4. "You state that the cost to produce RDRAM is 20% more than SDRAM/DDR, but I assume you mean the die size is roughly 20% bigger(?), so you should get only 16% less pieces of RDRAM than SDR/DDR sdram for each wafer. But this is not all. 1. You need a way to test/sort the chips. If the equipment costs are higher, or it takes longer to test, this adds up. 2. Yields of good chips vs bad chips. The actual # of good chips from each wafer also plays a part. Since each pin of drdram needs to run at much higher clock speeds, the tendency is to have lower yields. 3. There is always the demand side. If the volume is small, the higher rampup costs have to be amortized over less chips, hence cost goes up again. The total cost when you add them up is probably the primary reason why there is still a high premium in selling price. People will sell DRDRAM for less if they can. They can't." This is easier to answer. I do not just mean die size. I mean cost. See the Elpida, Toshiba, Samsung presentations from the INTC conference a few months ago. 5. Lastly, you state that because RDRAM can be sold for much more, increasing supply will yield extraordinary profits. This is arguable. I would propose instead that the demand for DRDRAM is not in the elastic part of the curve. Increasing DRDRAM supply will not move the demand significantly as the consumer demand of P4 over PIII is questionable right now. This is arguable though, and only time will tell if it unfolds correctly." Of course it's elastic. PIII's are gone by the end of the year, and P4 pricing is very agressive. 6. "Here's another funny thing about rambus licensing. Through each part of the supply chain of drdram memory, rmbs will get their cut. If I first buy DRDRAM memory, rambus gets their cut of X%. If it turns out I don't need this drdram memory and want to sell it to someone else, rambus gets another cut of X%. This is another reason why there is no spot market for drdram." Not sure what you mean. RMBS only gets the slice on memory from the memory maker, not the OEM. 7. "As usual, only time will tell." Yes, thank God.