You have to laugh. First we get Micron CEO Steve Appleton saying that low DRAM prices are a jolly good thing because they’ll drive necessary consolidation in the DRAM industry; then we get the German and EU authorities giving Qimonda a 165 million euro subsidy to build a DRAM fab in Saxony; then we find memory distributors Kingston offering a $40 rebate on a $40 memory card.
Appleton was speaking after a year in which his company had lost $262 million and laid off over 1,000 workers.
Is the world barmy?
No, just the memory industry, and it’s been like this for donkey’s years. When you get ten companies in a market each investing to grab 15 per cent market share, what do you get?
A pricing bloodbath.
Back in 1985 one remembers them flogging four 64K DRAMs for $1.
For 40 years there’ve been memory company CEOs saying stuff like:
‘We’re carrying on investing and adding capacity come what may’.
‘Let the other guy blink first’.
‘It’s a gladiatorial fight to the death’.
Why do they do it? Why do governments subsidise the memory industry?
Well, they say, companies do it because they can never quite forget the amazing rush they get in the rare years when everything goes right.
When prices are good, supply is tight and demand is strong.
Then the money just flows, and flows into the coffers. It creates a high like a big win on the horses, or the third dry martini.
But it’s awfully silly.
Leave a comment