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Memory chip production throttled

Summary

In January 1998 Japanese manufacturers such as Hitachi, Toshiba, Fujitsu and Mitsubishi cut back their investment in new memory chip factories. Because RAM prices had fallen sharply, the factories were no longer making enough profit. Artificial scarcity was meant to make prices rise again.

Ideas

  • Overcapacity makes memory chip prices collapse.
  • Manufacturers respond with less investment and tighter supply.
  • Memory prices fluctuate more than most other hardware prices.

Insights

  • The DRAM market follows a recurring cycle of oversupply and scarcity.
  • A few large manufacturers can steer prices through their production volume.

Facts

  • The manufacturers named included Hitachi, Toshiba, Fujitsu and Mitsubishi.
  • The reason was the sharp fall in RAM prices.

References

Critique

  • The report names neither prices nor quantities, so the extent of the slump cannot be assessed.

Recommendations

  • Buy memory anti-cyclically, when prices are low.
  • Plan for fluctuating memory prices in server procurement.

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