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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Skeeter Bug who wrote (32422)	9/9/1998 12:36:00 PM
From: Knighty Tin	Respond to of 132070

Skeets, they have stopped production on some 16 Mbit chips, but are not only building inventories, but increasing production on 64 Mbit and 256 Mbit chips. The merger of LGS and Hyundai assures overcapacity in Korea for at least one more product cycle. Once again, we come to the question of net cost vs. variable cost of producing one chip. Shutting down capacity lowers variable costs, as you obviously shut down your worst facilities. But, somebody still has to pay the interest on the debt to build that fab, the costs of layoffs, pay Amat for the crap they sold you, pay rent and/or property taxes on the space where the fab sits, etc. So your net costs jump tremendously as they are spread over fewer units. And, as these are costs without revenues attached, they have more than a one to one impact. Exactly how much impact is impossible to tell without access to Korean books, which I don't have. Let's just hope the Koreans have that access. <G> MB