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

To: Tom Simpson who wrote (3062)	4/26/1998 2:45:00 PM
From: Stitch	Read Replies (1) \| Respond to of 9256

Tom, << Seagate, QNTM, WDC, etc all build their drives over there same as MAXTOR and Fujitsu. I think Seagate was Thailand's biggest employer ... may still be. They get the same local cost benefits of local devaluations as everyone else.>> Finally...somebody gets it! Precisely. Best, Stitch

To: Tom Simpson who wrote (3062)	4/26/1998 4:54:00 PM
From: shane forbes	Read Replies (2) \| Respond to of 9256

Tom: A couple of quick comments and then this can be put to rest: About point (1): Add the word desperate to my "cheap DRAM capacity" and there is another dimension to the whole thing. If it were truly "cheap" as I had indicated those companies would be making a profit - they are not. Desperation breeds the desire to sell anything anywhere even at pitiful profit margins. I figure that's what the Koreans did with DRAM and I am guessing that this is what (at least some) of the Asian HDD companies have to do. (In my earlier post, by cheap I meant the end products would be cheap not mortar etc!!! Like I said picky, picky, picky... I have to be careful here - all lawyers! If you note the whole basis in my previous post was that the devaluation implied cheap end products never did I mention the cheaper PP&E.) ---- About point (2): My initial argument sometime in Nov. of last year was precisely yours - heck PCs are mainly used in the "developed" countries - they are immune to what's going on in troubled economies - so what if those troubled economies don't buy who cares they are too small to matter? Ah... But recent history does not bear this little argument out. I can point to NSM layoffs, VLSI announcing "difficult semiconductor conditions", MCHP pointing to Asia, SEMX, PC demand slowing down, semiconductor growth estimates coming down very hard from mid teens to perhaps 0-5% now and going lower, semi-equips likely going to negative growth this year from at least 10%+ initial estimates, weak electronics markets, bigger layoffs and furloughs in the semi-quip area than even 1996 and on and on and on and on- small and big - as long as the companies are linked to Asia the semiconductor commodity market is in trouble. I have even heard rumblings of the analog segment in trouble (though this would really amaze me.) The key thing to remember is that Japan exports a lot to Asia. To wit if Asia decides hey you know what we can't afford to buy your stuff then Japan suffers. Like the knee bone connected to the hip bone Japan is now in trouble. From what I have seen, Japanese spending in the last 6 weeks on the March. q evaporated. If Japan demand is in trouble then everyone in the electronics industry is in trouble. Hence like the Asian companies, the Japanese companies also now have a much smaller market to market into and bang demand is even much lower than it looked like on the face of it with just the Asians going silent. ---- On point (3): Absolutely true and I'm not arguing that. Perhaps I should have been more clear. (Like I said lawyers lawyers...) That entire post was talking about the sudden reason for the lower prices in mid-to-late-1997. 1997 only. I am suggesting that the US companies with their huge production bases had the proverbial motherload of drives in the channel when the currency devalutaions hit overnight. The smaller Asian competitors had squat (relatively speaking) in the channel at the time. Thus while the American companies were writing down a small fortune in inventory, the Asians were already selling a ton of cheap drives. So perhaps I should have modified by saying that it is a temporary effect and once the inventory adjustments are made everyone will be playing on the same level field. We shall see - it still seems to me that the Asian companies have an advantage here even if the US companies have a huge presence there. This is one of those gut feel things and I can't be certain. As a parting shot, Nike did a lot of Asian manufacturing didn't they - did not do them much good when demand fell and the markets were flooded with cheap Asian imports. --- Anyway I will stand by my basic suggestion that weak companies like JTS should not and would not be gaining market share if the currencies did not devalue. Seems too weird to me. If I'm right JTS and their ilk should soon be out of business unless we get another round of currency devaluations. --- Shane.