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

To: Bilow who wrote (53460)	1/9/2002 5:01:43 AM
From: Ohkami	Read Replies (1) \| Respond to of 53903

Hello Bilow, here are two arguments for the engineer re cost position: 1. Financial: Size of recent inventory write-downs at MU and IFX The following argument was made in the last IFX conference call and can be validated with public numbers: - MU inventory write-down was USD 466 million - IFX inventory write-down was EUR 114 million (i.e. about USD 100 million) - MU market share is about twice that of IFX - level of inventories as % of sales is equal or lower at MU than at IFX - i.e., MU must be writing down inventories of around twice the unit volume than IFX - inventory write down is the difference between market price and cost - i.e., as market price is comparable for IFX and MU, MU must have written down from a considerably higher previous cost position 2. Technical: Die sizes The following argument can be validated by examining the dies in the market: IFX dies size is about 10% smaller than that of MU and Samsung. E.g., for 128M, IFX recent die size is 47 sq.mm. vs 51 and 55 for the two others. (Everyone else is way bigger, 66 sq.mm. or higher). Same thing for 256M. A major reason for this is that IFX uses deep trench technology instead of stack cell technology, which is used by both MU and Samsung. Deep trench in effect allows you to get smaller dies from the same manufacturing line width than stack cell. E.g., I would argue that a deep trench made at 0.17 gives you about the die size of a stack cell made at 0.15. This is quite significant. The risk with deep trench is that it is, in theory, more difficult to manufacture (basically because of the depth of the trench being difficult to work in). So, IFX may run into manufacturability problems earlier than stack cell competitors. However, to date this has not been the case and IMHO we can now assume that at least until 0.10 the road is clear. Designing and manufacturing deep trench is quite different from stack cell and has its own learning curve so it's not easy for stack cell guys to simply switch to deep trench. The other players in the deep trench camp are, of course, Toshiba and IBM. So, one could reasonably hypothesize that MU may actually be interested in acquiring deep trench experience in the Toshiba deal.