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Technology Stocks : MEMC INT'L. (WFR -NYSE) The Sleeping Giant? -- Ignore unavailable to you. Want to Upgrade?

To: Scotsman who wrote (3408)	6/2/1998 3:50:00 AM
From: Carl R.	Read Replies (1) \| Respond to of 4697

The Koreans really got themselves in hot water once before with this strategy, and now they have blinked again. They slashed production of 16MB chips because the price was below their cost. It helped them for a little while by causing prices to shoot up, but in the end it came back to haunt them. One thing about the memory business is that cutting costs is dependant on statistical analysis and continual feedback from defects to production. If you start cutting back on production, your ability to reduce costs is diminished by reductions in statistics. Run those plants 24/7! The last time they did this, memory prices went up for a time, but MU shot ahead of them on cost reductions on 16MB chips, and never looked back, rapidly increasing production by increasing yields. MU is very good at cost reduction, and this will give them some breathing room, and probably a chance to get well ahead of the Koreans on cost of production of 64MB chips. I still think the Koreans are going to be the big loser in the end, and to me this makes it much more likely. Carl