“Elpida Memory Inc. (6665), Hynix Semiconductor Inc. and other makers of dynamic random-access memory, the most common chip in computers, lost a combined $14 billion in the past three years, according to Bloomberg calculations,” Culpan and Yang report. “That comes after the $37 billion that researcher DRAMeXchange estimates they spent building factories in a bet on continued growth in the industry.”
MacDailyNews Take: Bad bets are not Apple’s fault.
Culpan and Yang report, “DRAM prices plunged to a record low this month after PC shipments missed analyst forecasts and iPad sales reached a record 11.1 million. ‘DRAM makers invested too much, and they bet heavily that growth of the computer industry would always continue,’ said Chen Liway, an industry analyst at Polaris Securities Co. in Taipei. ‘That would have been OK if the iPad had never come along.’”
MacDailyNews Take: Change happens.
“PC shipments climbed 3.2 percent to 92 million units, compared with an earlier projection for 5.1 percent growth, Stamford, Connecticut-based Gartner said. iPad sales in the same period exceeded computer shipments by Dell Inc. (DELL), the world’s No. 3 seller,” Culpan and Yang report. “Apple has sold about 40 million iPads since the product’s debut last year, generating $25.3 billion in revenue. Apple may sell a record 20 million iPads globally during the holiday quarter, according to Forrester Research Inc. (FORR) in Cambridge, Massachusetts.”
Culpan and Yang report, “Elpida and other DRAM makers bet that new versions of Microsoft Corp.’s Windows and a stable global economy would drive demand for their chips. Instead, Windows sales fell…”
MacDailyNews Take: All cheer the end of Microsoft’s Dark Age of Personal Computing!
“Manufacturers like Elpida, which spent $3.8 billion on factories in the past four years, must keep churning out chips to generate enough cash to cover debt payments, pushing prices down even further,” Culpan and Yang report. “‘Elpida is using the state-of-the-art production technology, yet the finished products are sold for half the price of a rice ball,’ Yukio Sakamoto, chief executive officer of the Tokyo-based company, told investors last month.”
MacDailyNews Take: Leadership without vision equals failure.
Culpan and Yang report, “Suwon, South Korea-based Samsung, the world’s biggest semiconductor maker, will post 2.3 trillion won ($1.98 billion) profit from DRAM this year, according to Shinhan Investment Corp. in Seoul. That’s because Samsung sells twice as many specialty DRAM chips, where margins are higher, as commoditized chips used in PCs, Shinhan said in an Oct. 25 report. The company also supplies up to 64 gigabytes of NAND flash memory for every iPad, compared with about half a gigabyte of DRAM. Demand for NAND flash — which saves photos, videos and software permanently — will climb 49 percent in the five years to 2015 while the DRAM market will be little changed, according to iSuppli.”
MacDailyNews Take: Samsung deserves credit for anticipating future trends almost as much as they deserve the complete and immediate cancellation of Apple orders due to their serial, slavish copying of Apple’s products.
Culpan and Yang report, “Icheon, South Korea-based Hynix, the second-largest DRAM supplier, and Boise, Idaho-based Micron Technology Inc., the fourth-largest, also are increasing supply of NAND flash, helping both companies return to profitability last year after losses the two previous years… Elpida is following a similar path, spending the last two years developing versions of DRAM used in smartphones that it expects to ship to clients next quarter, Sakamoto told investors last month.”
Read more in the full article here.
MacDailyNews Take: Buggy whip and typewriter makers didn’t much like cars and computers, either. Change or die. There should be no remorse for lazy companies that fail to prepare for the future.