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Strategies & Market Trends : Asia Forum -- Ignore unavailable to you. Want to Upgrade?

To: Zeev Hed who wrote (5239)	7/22/1998 3:48:00 AM
From: Michael Sphar	Read Replies (1) \| Respond to of 9980

It seems to me, that DRAM production has continued way past the point of economic viability. In a normally competitive environment one would expect some of the players to fold at some point soon. Yet American, Japanese, Korean, German and Taiwanese manufacturers of DRAMs continue on their merry way, albeit with staggering losses starting to show. I've been waiting and looking for a sign of this folding to happen. The selling of DRAM capacity by TI to Micron is certainly good for TI but it doesn't do anything regarding worldwide over-capacity. So that is a false sign. With all the horrible sounding news out of Korea recently, including prominently announced work stoppages by Samsung and Hyundai I thought perhaps one of the Korean manufacturers might be considering throwing in the towel, wrong again! And here's why: The high-tech chaebols have cut back sharply on their capital purchases and helped their current cash flow statements this year by having taken large depreciation write offs last year. Also the high export content of their products are paid for largely in stronger foreign currency that adds far more won to their financial statements when converted back into the local coinage. So the worldwide carnage continues unabated and will do so for some time to come. Someday someone will blink. Probably not tomorrow.