Every time there is a memory downturn, people come up with 3-5 news items from the past 6 months to say why it happened. War, covid, hyperinflation, elections, FBI raids, interest rates. except we can predict the downturn accurate to 6 months .... 2-3 years ahead of time (I have an excel macro that predicts this based on lead time, inventory, and capacity lead times)
Every 4 years, the market downturns. This always happens after a strong increase and the crash is worse when there is a special cause to the increase or when someone says "this time is different"
DRAM memory sales increase at 15-18% like always .... steady state.
Server and PC demand tick up a little. need to react ASAP
Supply chain issue appear in the news
Buyers increase inventory and builds. but they show increasing demand so weeks of inventory looks OK
wait six months.....
Buyers decide we MIGHT have a slowdown... since life is cyclical. they cut to normal inventory and normal growth.
Buyers decide we definitely have a slowdown. "why am I paying $$ for memory when the price will drop 20% in next six months? we already have 3 months of inventory!" .... "Cut orders 50% for the next 4 months. That will get inventory on track and save us lots of money."
Memory suppliers say "but wait.... if we give you 20% off, will you buy some now? we gotta sell them somewhere or we will crash.
Bits crash, prices crash. and if the price is dropping 10% per quarter AND the supplier has inventory, buyer says "Why am I buying anything? I can do just in time ordering at super low prices"
This lasts until there is a small uptick (6-12 months) and Customers realize they have no inventory. and the opposite happens.
So how does one deal with this as a
1) Memory buyer?
2) Memory supplier?
3) Investor?
There are 3 REAL differences from previous cycles that influence next steps.
Call/text us know to discuss what will happen in the next 6-12 months. We will post follow up articles over the next 2 months
Mark Webb
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