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Wednesday, December 3, 2008


Company is saying they're focused on cost controls, they have a strong cash position. The problems in the industry are oversupply and consolidation and its obviously affecting orders. He's very specific in saying its not demand-related -- a debatable position as strength in netbooks and low-end notebooks are driving memory per box flat to down for the first time in several years.

Smaller customers are under massive over-supply pressure just to stay alive, they're not dying to buy more capacity. The bigger customers who can weather the storm are grinding down their gross margins by negotiating better pricing.

I think at some point the SSD bottleneck will break and there will be a big transition to SSD which will firm up NAND demand. Presently NAND configurations tend to be 4--32gb. When that moves to 80-120gb, it will start to soak up the supply. That's not going to happen until at least 4Q:2009 and even that might be aggressive in terms of time table. In the meanwhile, until these body shops in Asia churning out memory like they're potato chips shut down, the overcapacity situation will overhang the market.

Lam is a good company with great operating discipline and one to buy when there's some light at the end of the tunnel. For now, we're still fumbling around in the dark.

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