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To: wily who wrote (12681)	1/9/1999 5:54:00 AM
From: wily	Read Replies (1) \| Respond to of 93625

This is a PM from one of the most respected denizens of the MU thread. I believe it illuminates a few details of the RDRAM equation. My thanks to Carl R: To: wily (who wrote...) From: Carl R. Friday, Jan 8 1999 11:30PM ET Supply and demand will always be equal, but at what price? Remember that RDRAM will cost 50% more that DRAM, and be 50% more expensive to make. Initially the price difference will be even higher, perhaps twice as much. To the extent that RDRAM prices are more than 50% higher than SDRAM producers will divert production to RDRAM as it will be more profitable. A company like MU has a fixed number of wafer starts per week. It has a number of different products it produces, including 16MB DRAM, 8MB SRAM, 64MB EDO, 64MB SDRAM, 64MB RDRAM, etc. Each week or perhaps more often they will project prices for the various products, and costs for the products. This will enable them to compute a profit per wafer. They will increase the number of the more profitable wafers and decrease the number of the less profitable wafers. Thus RDRAM will settle in at about 30-50% more than SDRAM as makers divert production to RDRAM. But remember this, RDRAM will be about 25% bigger than SDRAM so converting to RDRAM gives you less chips in the end, thus decreasing the amount of bits available. Thus a rapid acceptance of RDRAM will accelerate the shortage for DRAM. Because of the trends in DRAM, the growth in bit demand for DRAM is sufficient to eventually catch the supply, and this could be sooner in RDRAM is popular. Once demand catches supply DRAM prices will cease to fall, and could even increase. But RDRAM will always remain 25-50% higher than SDRAM because it costs more to make that the manufacturer needs the maximum profit he can get per wafer. Carl