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To: Carl R. who wrote (44944)	4/9/1999 1:40:00 AM
From: Stefan	Read Replies (1) \| Respond to of 53903

Carl it looks like MU will spend about $1 billion on new equipment this year. Said company indicated it expects at least 100 percent dynamic random access memory (DRAM) bits growth this year and has increased its capital expenditure budget for the year to $1.1 billion from $900 million. biz.yahoo.com Fun part is that Sumsung will spend $1.8 billion and Taiwanese will through in some money with upward revision. I guess the game will be who can outspend the competition. Sort of like Cold War.<g> Mean time I don't think this will be good for MU company as it comes to MU stock - who knows? Reason and common sense are DEAD. RIP<g>

To: Carl R. who wrote (44944)	4/9/1999 10:57:00 AM
From: Thomas G. Busillo	Read Replies (1) \| Respond to of 53903

Carl, that's a fair interpretation. And I can understand the upside of having some stability in supply and margins, but this is where I see a problem (not with your interpretation, but from a "make/buy" POV) The prices are determined quarterly. They are generally a discount from the selling price, and are not a function of the cost of production. That's fair. But I guess my original observation was coming from that proverbial "make/buy decision" angle. In exchange for whatever upside it provides over the long-term, they loose that decision-making capability since they have to buy 100% of the JV's output. You're right in pointing out that there are some times when that would be the right decision and also that the GM's for goods from the JV's are not derived from the production costs of the JV's. However, if ultimately the gross margins on goods purchased from the JV's (derived from the actual prices for sales of the goods minus the $ actually paid by MU to the JV's as a function of that quarterly determined discount) are lower than the GM's from MU's fully-owned ops., in the short-term (during a period of excess supply) that's not a rational economic decision from the "make/buy" POV. In the long-term it may be a strategically sound decision (in a time of shortage, your absolutely right that the bottom line is having as much supply as possible to be able to command whatever temporary premiums are commanded) and an rational economic decision, but over 2Q MU These discounts were lower than gross margins realized by the Company in the second quarter of 1999 on similar products manufactured in the Company's wholly-owned facilities, but were higher than gross margins historically realized in periods of excess supply. Good trading, Tom