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To: Art Bechhoefer who wrote (27113)	12/8/2004 11:20:37 AM
From: broozer	Read Replies (1) \| Respond to of 60323

I did see that capex announcement by Samsung and also saw that Samsung predicted at least a 40% drop in ASPs in 05. If it was only a 40% drop in 05 that would actually not be too bad for the flash industry. My concern is that it becomes much worse. Your points on Samsung are good and I agree with you about their strategy to gain share and then raise prices. Samsung has really developed into a very large scale mfg of all kinds of semiconductors. They also appear to be developing a very nice consumer electronics brand. Question about the SNDK IP portfolio. Do you know what SNDK technology Samsung uses? Probably MLC. The thing about SNDK's patents, although very valuable, is that they all expire eventually. I have no idea when and they don't disclose. But SNDK's IP portfolio has been invaluable in maintaining margins and profitability. Best, Broozer

To: Art Bechhoefer who wrote (27113)	12/8/2004 8:30:57 PM
From: Bargain Hunter	Respond to of 60323

It would be nice to know how much of that $23B will be used for chip fabs. Also it would be useful to know what proportion of their chip output is represented by flash chips. As they expand production of various products it presumably becomes more cost-effective to build their own chips so they might produce more, say, cell phone core chips. And if they have flexible fabs they can trade off different types of chips to optimize their revenue mix. The overall result could be that they will produce too many flash chips when business in general is soft and too few when it is booming - with the result that flash prices will be even more cyclical than they might be otherwise.

To: Art Bechhoefer who wrote (27113)	12/12/2004 8:26:58 PM
From: broozer	Read Replies (1) \| Respond to of 60323

You can call this an example of irrational pricing, but it is consistent with a long used strategy by Korean companies to dominate a sector and then slowly begin raising prices once they are in the cat bird seat. Art Following your thoughts above, if Samsung dumps product in the marketplace to gain share this would hurt all flash producers but benefit flash marketers like LEXR. In effect, companies like LEXR & PNY would be the recipient of Samsung's predatory pricing. Do you think it could ever deteriorate to the point that marketers of flash like LEXR could get better pricing, and have higher margins, than vertically integrated companies like SNDK (b/c Samsung would be dumping product below cost)? In this scenario, it would be cheaper for SNDK to purchase non-captive supply from Samsung than to mfg it via Flashvision. BTW, does anyone know much about PNY? Are they publicly traded? Who owns them? Broozer