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To: John Wang who wrote (4586)	1/21/1998 4:16:00 PM
From: Sam	Read Replies (2) \| Respond to of 7841

John, "If this continues, Samsung may have to sell up its HDD inventory and reduce (or stop) producing because of inability to buy parts." Yes. I find it hard to believe that they would want to continue in the DD industry when they are having such a hard time in the chip sector. Now they have to pay cash to get materials to make chips! They are still a leader in chips, they are definitely a laggard in drives; the chip market is so much larger, plays into their strengths so much better; IMO it is only a matter of time before they either ditch DDs altogether, or at best focus on a very narrow segment of the market. If they try to keep everything together, they will lose everything. Maxtor is another story, at least for the time being. Their problem, though, will be that even though they have hit this cycle pretty well, they may not have any money to hit the next one, even assuming that they can see it coming. Which suggests to me that perhaps Hyundai may either sell them or spin them off, making them public again. Which would be a good thing, I think, for the other independents. I don't think that they would be too crazy as an indie--wouldn't have the same deep (potentially--obviously not actually at present) pockets standing behind them. One thing of note in the CC, aside from some of the things already said on the QNTM thread: SEG made a pretty big deal of the <$1,000 market. Said that they saw it as a "potentially huge" (I think those were their words) opportunity. They think that the only serious competitors in that market would have to be fully vertically integrated (guess who that would be?); otherwise, no chance to produce drives for it profitably. They added that of course they will have to execute better to be there (duh!). Hanging in there, but not really expecting much soon, Sam

To: John Wang who wrote (4586)	1/21/1998 6:16:00 PM
From: tom pope	Respond to of 7841

>>If this continues, Samsung may have to sell up its HDD inventory and reduce (or stop) producing because of inability to buy parts.<< I think a variation of this is key to prospects for the HDD industry in the context of Korean competition. In the short run, the Korean manufacturers will sell below the cost of producton just to produce cash flow. In the medium run, however the ability to finance the capex to keep up with technological change will cripple them. These comments do not apply to Fujitsu.