Should we bail out the DRAM makers?

Disagree with editor, situation is not just that easy to conclude - if you are not profitable this year, than we will kill you. Samsung and Hynix receive heavy government subsidizing (public and hidden) just to kick out other (western) players, after they will feel monopol, prices will go up. World must be balanced with supply in order to achieve stability in long term. See how Russia is now playing monopoly with Europe on gas. Another point is - when will investors recognize cyclical nature of semiconductors business and save money in good years for (always) coming bad years? Now if you are not rising for 20% each year, every smart guy (broker, investor, analyst) from Wallstreet thinks company should be killed or sold immediately. Robert - congratulations for clear words!

I agree with the comment about national security. We live in a relatively harmonious world(1st tier countries). What happens if china decides to go to war with the west over oil? Does japan join china or the west? What about korea? Last time I checked, if the east goes against the west, the west couldn't even build a laptop. No disk drives, no motherboards, no displays. The west would lose. The west has alot of "IP", but the east makes it all.

In principle, of course, I agree completely with the article, however, when a DRAM company in a free market economy is being killed by over-supply, created by overspending and excessive growth which is funded by government backed money in Asia?what message does it send? That Asia governments can force out Western companies, who spent and grown conservatively, by swamping the market with cheap chips? In 1999, the Samsung DRAM business was rescued by the Korean government, in 2000 Hynix was bailed out by Korean government-controlled banks and these days the Korean government indicated that this would be repeated, if necessary. Taiwan is doing the same with their DRAM business. Indeed, by fact, and driven by that Asian behaviour, we?re at the point where non-Asian governments are forced to decide which industries survive and those they let perish! The DRAM market is as volatile as the charge in its cell. We have times of abundant profit followed by steep falls. Currently the DRAM price is recovering and if the bailed-out companies properly do their homework and do not excessively expand capacity, they will re-gain their good standing and make good profits in two to three quarters. Temporary funding by other businesses (like multi-product manufacturer Samsung) or by the government (stand-alone DRAM manufacturers) has always been part of the DRAM business, and will most probably always be. The pay-back in good times is worth the investment.

Everybody should be aware that esp. the DRAM industry get´s money and support from the government all over the world since many years. It is not fair and open market. Only the government paying the biggest subvention (taxes, land, direct money) is getting the next fab. SAMSUNG is doing the same but within the company. It is the same situation like the ship yard industry in the 70´s. Would we all like to have this kind of industry only in the asian region because they paying the highest amount of subvention ??

The industry was rushing to larger (300mm) wafer size that overnight increased productivity by about x2.5, as well as much better equipment productivity and better defect control. The outcome of that was a glut of chips that obviously resulted in price decline. Imagine just what will happen to the industry with 450mm wafer size. Currently the world doesn't need more than 2-3 DRAM manufacturers. Qimonda and Micron will eventualy disapper!!

The key issue is oversupply and too many players in semiconductors. We are not talking about helping the third world or else nations will disappear or face famine. Instead of semiconductors invest in energy and environment.

Interesting Hemingway reference to "Old Man and the Sea" above, assuming it was intentional. Wish I had thought of it myself, "Old Man and the PC." (See: en.wikipedia.org/wiki/The_Old_Man_and_the_Sea) Thanks for the comment.

Being able to build world-class silicon in volume (as opposed to one wafer at a time for low volume military projects) is a national security issue in a world now so dependent upon electronic systems. Some governments that have recognized that over the last 20 years and have nursed their semiconductor industries in a variety of ways. Those that have not have been falling behind (e.g the UK) or have been retreating into narrower and narrower niches to forestall being overwhelmed by the volume players (e.g. the US). If we could keep governments out that would be just dandy, but countries who want a seat at the world table are not inclined to sit on their hands. They understand that the quality of life in their country will be different if their citizens are making computer chips rather than potato chips. Nobody should advocate throwing money down a rat hole...but we should have been helping our own semiconductor industry enough to give it an even shot in the world market. It is not quite yet too late for us to do so but night is falling fast.

I think that I have enough of every tome of memory to last me for a long time.I learned to buy it on a lowest low , since Krazy Glue factory burnt down about 15 years ago(that was better speculation than prices of gas today) and prices of memory trippled overnight.To get to a point - NO I would not bail them out.