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Group,
I listened to an interesting conference call last night. The conference call
was out of Merrill Lynch featuring Kurlak and Stern talking about the impact of
the reduction in spending in Japan and Taiwan in the semiconductor industry.
Since this is a "technical" forum, I won't bore you with the details, but there
was one tidbit that I thought might be worth mentioning.
Remember when Jim selected MU as a weekly selecton and some of us collectively
talked him out of it? I got some background of why the DRAM prices were firming
last night. That made no sense before, it does now.
It turns out that at the height of the crisis in Korea, Lucky Goldstar and
Hunydai (sp?) shut capacity and sold inventory to raise cash. This inventory
liquidation caused the downturn in DRAM prices. I theorized about the inventory
liquidation, but I hadn't realized they shut capacity. Now that the inventory
has been sold off, the prices are firming, but.... The shuttered capacity is now
back on-line again and "the Koreans are ready to exploit" the advantage of a
depreciated currency. The DRAM hits the US shore around March in quantity.
US analysts are at the Montgomery conference listening to MU and others talk
about how prices are firming etc, and they are marking up the estimates
accordingly. I wonder what they will be doing come April.
----
Dave
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