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After a rough fourth quarter, NAND manufacturers hoped to get a break and instead they got slammed by more bad news, this time from Apple

Apple Inc. last year spent $1.2B USD on NAND flash memory for its consumer electronics devices.  Most of Apple's wildly popular iPod family sports the memory -- the iPod Shuffle, the iPod Nano, and the iPod Touches all use it for storage.  The iPhone also uses NAND, further increasing Apple's already sizable NAND appetite.  Thus Apple's decision hold a significant sway on NAND's fate.

Perhaps predicting slow iPod/iPhone growth, Apple dramatically scaled back its NAND predictions for 2008, sending NAND manufacturers into a panic.  The news, which also may signal bad news for Apple, may be a reflection of the sagging of the U.S. economy, burdened by the U.S. sub-prime mortgage crisis, which has led many analysts to predict a rather dire consumer market for the year.  Apple continues to cut prices in hopes of keeping sales alive, but the outlook is still far from rosy.

iSuppli announced the shifting estimate from Apple on Wednesday, stating, "Apple Inc. has slashed its 2008 NAND order forecast significantly and has informed suppliers that its demand growth will slow in 2008 compared to 2007."

Before iSuppli had predicted a 32% increase in NAND orders for 2008 from Apple.  The change caused iSuppli to drop its estimate for global NAND growth from 27 percent to "single digit" percentage growth from last year's $13.9B USD market.  According to iSuppli in Q1 '08 NAND manufacturers will also invest a 20 percent increase in capital spending, which will increase capacity and lower prices for the consumer, but add further to the suppliers financial woes. 

The year of 2007 held mixed results for NAND suppliers, but still may be looked back fondly upon in comparison to 2008.  In 2007 NAND overall saw 12.5 percent growth.  However in Q3 and Q4 of 2007, six of the top eight NAND producers saw sequential declines in revenue.  Only Micron and Intel escaped this trend.  Samsung and Toshiba, who hold the number one and two spots respectively, were among the losers, but remain on top of the struggling market.

Some top tier NAND suppliers vested in DRAM production as well will get doubly hit, as DRAM is supposed to have an extremely poor year as well, experiencing poor growth of only 4 percent.  While single digit growth may seem acceptable to some, the constant demands for increased capacity at lower prices means that single digit growth typically equates to significant revenue losses.


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RE: Rotten ecomomy?
By Crucial on 2/21/2008 3:06:10 PM , Rating: 2
Just because the talking heads keep spouting off about recession doesn't mean it's happening like they say.


RE: Rotten ecomomy?
By h0kiez on 2/21/2008 3:13:38 PM , Rating: 2
Oh, it's happening. The dollar is going to crumble thanks to the genius economic policies of our leaders. Our dependence on oil will have us sucking at the teet even when it'll be close to $4/gallon later this year. The consumer price index numbers that just came out showed prices 4.2% in the last year. Did you get a 4.2% or greater raise? Maybe you did...but I doubt the average Joe did. American consumer and government (emphasis on the government) spending is out of control and unsustainable. America will eventually be a shill of its former self.

Got me thinking about a recent Digg article that quotes:

""A democracy is always temporary in nature; it simply cannot exist as a permanent form of government. A democracy will continue to exist up until the time that voters discover that they can vote themselves generous gifts from the public treasury. From that moment on, the majority always votes for the candidates who promise the most benefits from the public treasury, with the result that every democracy will finally collapse due to loose fiscal policy, which is always followed by a dictatorship.""


RE: Rotten ecomomy?
By FITCamaro on 2/21/08, Rating: 0
RE: Rotten ecomomy?
By themadmilkman on 2/21/08, Rating: 0
RE: Rotten ecomomy?
By clovell on 2/21/2008 4:52:49 PM , Rating: 2
It's actually a fairly well-studied and proven economic theory that tax breaks don't negatively impact tax revenues.


RE: Rotten ecomomy?
By Ringold on 2/21/2008 7:05:55 PM , Rating: 2
To add to that, Google and take a gander at the capital gains tax revenues from the 80s; you'll see steady increases until 1986, when it is learned in the last 3 months of the year that 1987 will see a significantly higher rate. Investors scramble to take all the capital gains they possibly can that year, and then tax revenue collapses, not to return to 1985 levels until 1995. The tax hike lowered revenue.

It's a thing of beauty.


RE: Rotten ecomomy?
By NarcoticHobo on 2/22/2008 12:53:24 AM , Rating: 3
Actually that is referred to as the Laffer curve, something heavily ingrained in supply side economics. Far from being a well-studied and "proven" economic theory it is actually the most controversial theory in all of modern economics.

While there have been documented cases of revenue not decreasing due to tax breaks, there are plenty of documented cases showing the opposite as well.

Just be careful what we are throwing around as facts.


RE: Rotten ecomomy?
By clovell on 2/22/2008 11:09:01 AM , Rating: 2
I was driving more at the 'prime the pump' philosophy than I was at the Laffer curve - which essentially is an illustration that tax rates reach a point of diminishing returns.


RE: Rotten ecomomy?
By Ringold on 2/22/2008 11:13:32 AM , Rating: 2
Of course if you raise tax rates then often enough tax revenue will increase.

However, that's extremely myopic, dealing only in the short term. There's less debate than you let on that higher tax rates lower growth, leading over time to lower tax revenues than the government would have otherwise (within an applicable range of tax rates) -- and, of course, less overall prosperity for the nations economy.

Feel free to google the "Irish miracle." Reaganomics + good oversight (renewed focus on education, for example) took one of the worst economies in Europe and completely turned it around.


RE: Rotten ecomomy?
By Samus on 2/23/2008 8:21:39 AM , Rating: 2
No matter who you vote for, we are still a democracy, FIT. He isn't talking about a party, he's talking about the system. Democratic systems run by democrats or republicans have the same key flaws previously stated.


RE: Rotten ecomomy?
By BansheeX on 2/24/2008 1:43:43 AM , Rating: 2
We are not a democracy, we are a REPUBLIC. What your dumbfck politicians and media chirp to you all day doesn't change this. This has nothing to do with what the party terms democrat and republican have come to define, hence the confusion. Democracy is mob rule while a republic enforces a constitution to protect individual rights from the tyranny of the majority. I suggest you google democracy vs republic and figure this out.

"and to the republic, for which it stands..."


RE: Rotten ecomomy?
By ebakke on 2/21/2008 3:55:04 PM , Rating: 2
Oh cripes. The economy is doing just fine. I hate this damn fear mongering.

Fairly well written article:
http://online.wsj.com/public/article_print/SB12014...


RE: Rotten ecomomy?
By FITCamaro on 2/21/2008 4:06:16 PM , Rating: 2
I agree. I think if there was a recession, it would be because mainstream media caused it by creating a panic.


RE: Rotten ecomomy?
By BansheeX on 2/21/2008 10:14:15 PM , Rating: 2
Oh, brother, here we go again with nominal values adjusted with worthless government statistics. Then end is particularly telling "Keep the faith. Now is a great time to buy." That should just jump out and scream at you. Luskin was calling the bottom last fall and telling people to buy with both fists, and you would have lost big if you did. But I'm guessing you don't understand the stock market enough to see the red flag.

http://www.youtube.com/watch?v=emvMqjtcO7o

There, now you have a small crash course. Schiff always has been an excellent orator for the average joe.

The nominal GDP rate of growth is gotten by assuming annualized inflation that is grossly, grossly below what it actually is. You need only go outside every once in a while to see that reality is far outpacing this number. Commodity prices are simply jetpacking right now to all-time highs with no signs of slowing down. What was oil today? $100 a barrel, with many predicting $150? If you read any articles that are critical of the CPI figures and how they are calculated and how they have changed over the years, you will see that the federal reserve is blatantly trying to mask inflation so that the masses will glaze over nominally-obsessed corporate cheerleader articles such as the one you just referenced. Because the borrow and spend system is largely dependent on the consumer and investor confidence to prop it up.

http://www.youtube.com/watch?v=-w5pSm_BLGU


RE: Rotten ecomomy?
By stonemetal on 2/21/2008 4:08:48 PM , Rating: 2
no thanks I will take my economic punditry from someone who knows the difference between shell and shill. The thing with the sub prime market is just that the sub prime market. They didn't have any money to spend any way that is why they were sub prime to begin with. All those defaulted properties still have value so the lenders aren't out much except the loss in property value from trying to move so much property at once. What is killing us right now is the appearance of weakness not actual weakness.


RE: Rotten ecomomy?
By callmeroy on 2/22/2008 10:21:50 AM , Rating: 2
quote:
The thing with the sub prime market is just that the sub prime market. They didn't have any money to spend any way that is why they were sub prime to begin with. All those defaulted properties still have value so the lenders aren't out much except the loss in property value from trying to move so much property at once.


You know I never do just assume people on the 'net know what they are talking about but its a strange feeling when you actually catch someone saying something that you know for FACT is wrong.

The mortgage industry is in dire straits indeed and to say the lenders aren't out much is silly indeed. Historic losses have been taken in the mortage industry as of late, historic.

Hundreds of independent mortgage firms across the country have folded completely. One of the behemoths of the industry, Countrywide (which btw was THE largest ) had to rely on BoA to bail them out. Over 100k jobs in the industry have been lost up to now, with more losses predicted before the next quarter, let alone the year is done.

If you don't think the mortgage market crisis is a big deal or not much of a loss - you really don't understand either the true condition of the market right now nor the importance the mortgage industry has on the national economy as a whole.

The biggest purchase and greatest material asset one can make/own is your home. It doesn't take an economics major to figure out how a major industry, a major economic engine to a country's economy has rippling affects into other industries.

I wish some of the information our company passes around internally could be posted here, but I could get in trouble if I did that.

Btw, I work for a mortgage company (well for now - its getting pretty scary).


RE: Rotten ecomomy?
By gramboh on 2/22/2008 3:13:05 PM , Rating: 2
Excellent points, to downplay it as minimal loses is insane. Two other things:

1) The sub-prime issue is not just with the intial lenders, but the fact that these rotten mortgages were packaged into deals sold on a secondary market is screwing over other institutional investors (who some would argue were mislead over risk). Also, there is a huge impact on overall market confidence. This hit our markets in Canada as well due to our trade relations.

2) My current fear is a coming consumer credit crisis. I don't have the actual stats handy, but the average amount of American consumer credit card debt is frightening. A slight downturn in the economy where jobs are lost or wages do not grow or housing devaluation could cause a nasty cascade if all these bozos who have $30k of CC debt on useless consumer goods start defaulting.


RE: Rotten ecomomy?
By rcc on 2/21/2008 4:41:58 PM , Rating: 3
Thats why the founding fathers did not set up a democracy. The U.S. Government is a form of Republic


RE: Rotten ecomomy?
By Aloonatic on 2/22/2008 4:47:59 AM , Rating: 2
Would love to know where that quote was from.

It pretty much sums up the state of play in the UK.

We've had 10 years of Blair/Brown's NuLabour government and their benefits packages paid directly into the electorates bank accounts have all but destroyed the democratic process in many areas of the UK, if not the country as a whole.

NuLabour can do pretty much whatever they like and lots of the electorate are too financially dependent on the benefits they receive to dare to vote them out of power.

Luckly it would seem that, as the economy worsens, this policy is becoming harder for them to finance and the rest of the UK are getting sick of the ridiculous stealth taxs/charges and fines that they are being forced to pay just to keep Gordon and his cronies in power.

Not sure what that has to do with Apple and Memory chips :-s

I think I need to sit down quietly for a minute :)


RE: Rotten ecomomy?
By jhinoz on 2/22/2008 5:33:00 AM , Rating: 2
going off topic seems to be in fashion around here anyways.

on your point, and against the quote in question, the australian public voted in a labor party government that promised slightly less public spending that the liberal/national coalition party, ending over a decade of liberal government.

during this time, the gov. had a pretty decent budget surplus to play with yet we still voted for less spending?


RE: Rotten ecomomy?
By emarston on 2/22/2008 11:02:52 AM , Rating: 2
The dollar has been artificially high for too long. While I'm not totally happy with the fact that my money doesn't go as far right now, this does bring more balance to trade. If the value of the dollar is less than our "trade deficit" is less as well since the foreign currencies are worth more. Of course, China, while sort of floating their currency now, still is artificially limiting it's value for precisely this reason. Our desire for cheap goods continues to fuel this.

We'll never be the economic power we were decades ago though. Other countries of the world want their piece of the pie.


RE: Rotten ecomomy?
By teckytech9 on 2/23/2008 1:44:16 AM , Rating: 2
It has been estimated that within eight years time, the average low-skilled job in America will be equal in monetary value to the same job performed today in China.

China will not only produce US goods and services, but will be able to afford them as well. When this happens, US companies will find little incentives to outsource any more jobs overseas, and will instead, receive an influx of jobs supporting foreign companies.

In the meantime, foreign capital will continue to bail-out US companies that have mismanaged their funds due to greed, corruption, and predatory lending practices.


"People Don't Respect Confidentiality in This Industry" -- Sony Computer Entertainment of America President and CEO Jack Tretton














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