[citation][nom]DRosencraft[/nom]Wasn't there an article just a few weeks ago claiming that DRAM manufacturers were going to start ramping production back up again becuase they had reached the supply/demand equilibrium? It may be my lack of understanding of the intricacies of markets and what not, but don't you price your products based on the cost you incur making them? In other words, if you make a million chips last quarter, but only sell 3/4 of a million, don't you just make 3/4 of a million the next quarter, using the left over 1/4 of a million from before as oversupply in case of a production miss this quarter? I don't understand why these memory chip makers are having so much trouble figuring out how many chips they need to make. I really can't think of another industry that has had so much trouble for so long figuring out their supply/demand structure. I meanm, Elpidia is a huge name in memory. There's no reason it should have gone bankrupt. It sounds to me like they got greedy, tried to push up production thinking they would certainly be able to sell all of it and make a huge profit, assuming the market saturation wouldn't catch up to them.[/citation]
Here's some business economics for you. At the volume of production they have it cost's relatively little more to produce full output vs reduced output. Foundries are required to produce near max output almost constantly to make money as the operating cost's to keep a plant up and running consume a vast amount of the operating costs. Now they could rampdown production and try to 'meet' the market, the problem is if they miss a market forcast and end up short, they lose contract's to competitors and this has the potential to cost them a lot more money then an oversupply.