Semi Supply To Match Demand Shock

Following reports during the week that the foundries, TSMC, UMC, Chartered and SMIC are going to cut back on capex spending for 2008, because they’re fed up with the ever-falling price of wafers, come reports that the DRAM vendors are heading in the same direction.

Micron, ProMOS, Samsung, Hynix and Nanya will all cut back capex in 2008, according to analysts iSuppli, in a story repeated on newswires across the world.

The reason is an apparent DRAM mountain which the manufacturers would like to see shifted.

Back in the summer, of course, Samsung had that little local difficulty with a mysterious ‘power outage’, the reason for which was never explained, which conveniently served to raise DRAM orders, prices, and DRAM vendors’ share prices.

Since then, however, things have slipped back to a state of over-supply and lousy prices with Hynix recently saying it expects to make a loss in Q4.

So it’s eminently sensible to stop adding more capacity.

So why is it thought odd if chip companies try and balance supply and demand?

Maybe it’s symptomatic of the semiconductor industry’s reputation as an indiscriminate spender of capital.

Maybe, now that it’s going to be 60 years old this coming Sunday, the semiconductor industry has grown up.