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Korean DRAM makers ‘want to force down prices’

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Samsung and Hyundai, the world's two biggest DRAM makers, are trying to persuade Taiwanese competitors to work with them in cutting DRAM spot prices, according to a peculiar story in the Commercial Times, of Taiwan.

The newspaper quotes "a widespread rumour" that the Korean companies want to stimulate demand by lowering the 64Mb DRAM spot price to below $4.

And we thought cartels were supposed to raise prices. Apparently, Micron's manufacturing unit costs are $3.50, so any lowering of prices - we infer - would avoid anti-dumping action.

However, Taiwanese DRAM maker Nanya, quoted in the very same Commercial Times article said that it had no intention of selling DRAM at "such irrational prices".

Furthermore, the company confirmed that the Koreans had visited the island to discuss the DRAM industry, but had put forward no ideas to cut prices. Which makes sense.

With 40 per cent or so of the world DRAM market, Samsung and Hyundai (how friendly are they, anyhow?)have no need to co-opt the Taiwanese into forcing down prices. And what would be gained in any case? With inventory levels falling at last and demand beginning to rise, why would DRAM makers deliberately force down prices from what are already low levels?

According to the Commercial Times, DRAM spot prices (presumably yesterday) "fell to US$4.50-US$4.60 per unit, and failed to test US$3.90 due to a lack of sellers. In the US, the DRAM spot price remains stable above US$5." ®

Related Link

Asiabiztech: DRAM Chip Spot Prices Likely to Recover in Early 2001

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