Price-terrorism?

In the real world, we have threatened by the bioterrorism and second week of U.S.-led air strikes in Afghanistan. In the DRAM industry, we have just come to the unbelievable low price --spot price for 128Mb (16*8) SDRAM has broken 1-dollar into 0.99 and 0.98 level for worldwide leading brands.

Bottom Cost right now?

Under current price situation, everyone is desperate to know which price will be the bottom? Disregarding depreciation, amortization, SG&A and net Interest expense those are huge range difference from company to company. Let us directly point to the Materials+Labor+Overhead cost for 128Mb is still around 0.8 to 1.3 (different from advanced micron-technology and output yield rate); Packaging + Test, let say the cheapest offering for this is still 0.4 or 0.5. So, what does 1-dollar stand? Where is the bottom?

Cash burn.

Just from the Cash on Hand view and current price situation.  

It’s no doubt Hynix is most dangerous one under current situation. NEC and Toshiba also don’t show good sight on DRAM section’s cash burn rate, but they are on the way out of DRAM business. Infineon is the second cash burn rate one if we don’t count Japanese companies. Samsung and Micron sit on the top of safe position to overcome counterparts. Generally speaking Taiwanese DRAM companies are in a relatively strong position than Hynix and Infineon. Nanya is relatively vulnerability comparing with other Taiwanese companies in current cash on hand situation. Powerchip and Winbond can survive over 3 years based on current price situation and without further investment. ProMos is the one who is positive net cash flow at the operating level since all its product ship to Infineon and Mosel Vitelic.   

Price – the most effective Weapon?

Unlike anthrax bacteria which are illegal on DRAM battle, price seems the fair weapon on free market. Let price decide what it will be - no matter Government or banks’ continuing support, no matter current market share, no matter technology leading. The price strike eventually will tell the winner?