According to numerous Korean press reports, Hynix and Samsung have been approached about 3-6 month DRAM supply contracts at a 10-20% premium to spot prices. This would give manufacturers much needed near-term working capital. Conversely, however, it would lock DRAM manufacturers in at small price increases considering they believe there will be shortages in Q3. Cash strapped Hynix has taken a couple of these deals already. It is likely Taiwan companies would be interested also as they’re in cash trouble, too.
Micron is doing a $450 mil offering of stock and converts, likely to finance acquisition of cheap and distressed assets. It’s probably worth exploring on extreme weakness. Lazard has them for lunch today.
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