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Technology Stocks : Disk Drive Sector Discussion Forum -- Ignore unavailable to you. Want to Upgrade?

To: Pierre-X who wrote (3055)	4/26/1998 3:33:00 AM
From: shane forbes	Read Replies (1) \| Respond to of 9256

Pierre: I stand (partially) corrected. On Now, you certainly can't say the currency crisis had a whole lot to do with the DRAM implosion. The entire story I guess went something like this. Korea thinks that they can continue to rule the DRAM world by accelerating cap.exp in 1996 and part of 1997 using foreign denominated debt. Then the won devalued for all those evil reasons. Their economies shut down and Asian demand thereby sinks. Now the Koreans had plenty of cheap DRAM capcity and lowered demand (since Asia shuts down). (and OK yes I admit it I am really straining here - this is only partially right since the 0.30 and lower shrinks had a good part in this surge in available capacity at least from MU's vantage point. Early on I guess a lot of the blame could be put on MU.) ---- To conclude on DRAM: The entire DRAM mess can originally be traced to the Koreans' aggressive cap. additions to rule the world (commencing early 1996) but the whole mess was exacerbated sometime in 1997 when their currencies went down to fiddlesticks and the Asian economies thereby crumbled. A lot of cheap capacity was let loose; demand in one part of the world (Asia) collapsed. Cheaper capacity - lowered demand - desperation to sell to pay for debt. Mix the 3 culprits together (all tied fundamentally to the currency devaluation which in turn was caused by poor financing strategies I guess) and you get some of the fastest and ugliest price reductions in DRAM pricing historically ever in late 1997 (Caveat by saying design shrinks led to another capacity explosion but that would not support my view...!) ---- Likewise I think one may make a similar argument about HDDs. Currency devaluation and destroyed local markets and I guess high debt levels made these guys ready to sell something somewhere real fast. Why not turn one's eyes to the US they say? After all Europe was still in their summer slumber. China was growing but small. ROW who cares. The reason it may have taken a bit longer in DDs cp. to DRAMs to manifest itself is the different dynamics of the players: fewer large players in DDs than DRAMs fewer Asian/Korean players the Americans still controlled a huge portion of the market. ---- Now when you take the whole thing together I figure there was maybe roughly a $80 reduction in DRAMs and maybe a $150 dollar reduction in HDDs and perhaps a few $10-20 reduction in the CD. Not enough to invalidate the $500 PC and that's why I figure I am mostly wrong. But continuing to fight the good fight... :-) ---- I guess all I'm saying is that in both DRAM and HDD (with differences noted above) it seems to me that the : currency devaluations (and Asian economies collapsing) led to a lot of cheap capacity available (from the Asian manufacturers) and lowered demand (from the Asian economies) to wit worldwide demand-capacity goes through a serious perturbation. Tada - the sub 800 PC is born. After all the implication of devaluation fundamentally is to make your products more competitive. It seems to me at least a strange coincidence that just last year the Maxtors and especially really weak players like the JTSs of the world see their largest gains in revenue and market share in a long long time. Perhaps all wrong but good fiction... :-) ---- Shane.