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Governments Preparing To Bail Out DRAM Makers
An anonymous reader writes "DRAM makers are facing one of the worst downturns in their history and governments around the world are lining up to help companies through the mess. Taiwan, Germany and South Korea all appear poised to offer some assistance to their DRAM chip makers. The chip makers' problems are indicative of global woes. Easy lending terms and a bright view of the future prompted them to build too many new DRAM factories. Much of the new output was aimed at Microsoft's Windows Vista, which has higher memory requirements than XP."
Do government bail outs happen all the time, and its only recently that the term "bail out" has become popular? Or are all industries everywhere simultaneously going broke just now?
I don't follow the financial world much, so all of a sudden I see * industry bailouts over and over again... From an outsider's perspective, it kinda seems like a bandwagon
Where do I sign up to get bailed out of my personal company's (i.e. me) financial problems by the government?
Anyways, isn't bankruptcy supposed to be the "bail out," but with accountability instead of just writing large checks and calling it a successful bail out?
If anyone gets any government money, they ought to be held accountable for its use and for making sure that this situation never happens again.
I wish politicians, CEOs, and just the general public would start looking at the long term costs and benefits rather than focusing on immediate reward. Think of all the current worldwide problems we wouldn't have to worry about! Then again, thats much easier said than done...
Bail out people, not businesses. How about instead of spending $8 trillion or so on bailouts for businesses, just give each man, woman, and child a check for $25k?
It's not just the financial institutions - now it's the car companies (stalled for the moment), airlines - and foreign businesses are lining up for a handout now too.
Why bother with improved products or competitive pricing? Let's just build a factory, make some overpriced junk, then have the government give us a bunch of money? Seems like this is the new gold rush...
These Bail outs are out of control. Australian Prime Minister Kevin Rudd just bailed out Australian Car Dealers to the tune of $2B -- yes! That's car salesman! -- , hot on the heals of an $6B Bailout of Australia's world famous COUGH COUGH car industry. Not that America's $15B car industry is any more deserving. Oh and he just bailed out a failed child car company to the tune of $40M, but no one noticed. Hey real estate agents and IT workers are hurting too. What about bailing out us?
Now I understand bailing out banks via FIDC, but now we're bailing out investment banks too, and now of all things DRAM Makers? Because they overmanufactured? There comes a time to let nature take its course and let more efficient *smarter* companies rise from the ashes. Why are we propping up dinosaurs? With taxpayer dollars at that?
The thing is that governments now realise that if they let industry sectors fail, that makes lots of people unemployed, which strains the state and cripples the economy.
If people aren't earning, they aren't spending, and also, tens of thousands/hundreds of thousands of unemployed people who could have had their jobs saved may well feel unhappy in a 'get rid of this useless government' kind of way.
So, its either bail out the companies, or sink into a very real and long term recession mixed with political unrest.
A learning experience is one of those things that say, 'You know that thing you just did? Don't do that.' - D. Adams
I think that this is just another instance of customers locked into Win32-compatibility game. Joe Sixpack never needs more then 2GB of RAM. His Vista Home/XP home wouldn't use it anyway (OK, maybe 3GB). Applications stuck with 32-bits because, well, Joe Sixpack owns Win32 computer, not 64-bit one. DRAM companies are hostages in this game.
839*929
Remember in the 80's the government supplied easy loans to the farmers in the US. It was only about 5 years later they were going back to the same farmers and foreclosing on their farms and auctioning off whatever they could. Giving out money to solve business problems has never worked in the long run with examples throughout history. The whole farm crash stated earlier may have been averted by helping adjust the prices they got at market instead of squeezing them until their eyes popped followed by some cash to smooth it over. This whole bail fiasco is destined to blow up in the face of the following administration and the only real victims of the short sighted solution are the tax payers. It's been write a long time since we have seen any politician who has insight or forethought beyond their term in office. The de facto thinking these days seems to be what can I get out of it without getting caught. Even the getting caught part has become secondary in many cases.
As the only remaining DRAM manufacturer in the US, what does this mean for Micron? How will they be able to compete if the overseas companies get bailed out?
that's all folks
if every MB had 8 dimm slots as standard, and XP supported 16gig ram, more people would upgrade nicely, then again if XP used memory nicely people would too.
If MS were kinda enough to offer free XP64 for Xp32 people that too would spur demand. (Is it so hard for MS to let people download a free ISO?)
Then again, if the ram companies didnt do illegal deals, they wouldnt have had those billion dollar lawsuits payouts.
Liberty freedom are no1, not dicks in suits.
It feels like I've been in a time slip (please God nobody reply and say "well it IS 2002 dumbass.")
To have a right to do a thing is not at all the same as to be right in doing it
Economists have no mathamatics training.
They think the world is an infinite size with zero stoppage.
Try growing 1000 fish in a small fish tank, eventually it will get so crowded, that 90% die.
I think that 2B bailout wasnt free cash, it was just no questions asked loans, which the banks wont do anymore. Hello banks, you can keep all the billions in cash, but its useless if you cannot spend it, or loan it.
But no amount of free cash or 0% loans will save the economy. Its unsavable, it has to crash/reboot/reformat/reinstall a new system.
Liberty freedom are no1, not dicks in suits.
Much of the new output was aimed at Microsoft's Windows Vista
:-)
So you're telling me Vista is actually good for something, stimulating an industry?
-- http://ninthagenda.com/
If you read TFA, it's the low sales figures for Vista that has their panties in a bunch. Add in another sentence or something in the summary. The thought is incomplete. It's actually not easy to guess what they were trying to get at here with it.
If you skip the initial ad, I've found that PCWorld allow you to read the article for about 5 seconds before redirecting you to page full of ads.
Guess I won't be buying or reading PC World now.
XML is like violence. If it doesn't solve the problem, use more.
is that life isn't an Ayn Rand novel.
Your simpleminded Libertarian certitudes don't add anything to the conversation, much like your life doesn't add anything to the world we live in.
I read the whole article replacing DRAM for DRM, but it was fun :)
dot slash dot slash dot org
Throughout the 32-bit generation, consumers have always needed a predictable amount of the next higher size in RAM at predictable intervals. Now we're up against the 32-bit boundary, so if you want to make use of more than 3GB you need to upgrade to a 64-bit OS. For Apple and Linux that's no problem, but Vista 64 is not ready for prime time, and it looks like SP2 is not going to revert the bone-headed requirement to have signed drivers. That means people aren't going to be able to migrate all their old 32 bit apps transparently, and it will delay the actual 64-bit transition until the release of Windows 7. That means RAM manufacturers are going to need to cool their heels for another year or two before most people are ready to take the jump to 4GB.
(Personally I just bought an OEM copy of Vista 64 and upgraded my desktop from 2GB to 8GB. It turns out I should have done a bit more research, because Vmware Server doesn't run on Vista 64 yet. Sigh.)
2nd: Profit
3rd: Government Bailout
4th: Profit Again
Spectacular business model, they manage to squeeze profit in twice.
Imagination drew in bold strokes, instantly serving hopes and fears, while knowledge advanced by slow increments...
Weren't DRAM manufacturers just involved in a huge price fixing scheme? Oh yeah, http://en.wikipedia.org/wiki/DRAM_price_fixing.
So the industry that flouts the law is now requesting artificial support to help them through hard times? What's the real impact if these companies fail? Their assets get sold at a discount, their creditors take a loss, and the world moves on. The technology doesn't disappear. The knowledge of their employees doesn't evaporate. If the business can't survive without manipulating the market or government support, it doesn't deserve to exist.
If DRAM is a valuable technology, somebody, somewhere, can run a business doing it. If that's not possible, then stop doing it.
Maybe everyone should just name a new industry and then mandate that people give them money. That would be so much easier, than say, actually creating value.
That's what all the statistics say or said anyway. Vista sales are now a larger %of sales than any other OS. Apparently they still have 90% of the market and there are fans of MS who STILL say that Linux has 1% and Mac 4%.
MS were saying that the sales of Vista met expectations.
MS sellers were saying the same on their accounting projections.
Asus say that their Windows version outsells Linux 3:1.
How can they be doing so badly then?
What a relief to realize it was only "DRAM Makers".
This one is really easy to fix, just pour a lot of money into Microsoft to speed up their delivery of a Vista followup. That should keep the Memory and CPU manufacturers busy and profitable until this crisis is over...
Bailing out an industry or business is a huge form of government management of the economy. I do not recall any government managed economy that could be described vibrant and thriving in any sense of the word.
The rationale for the bail outs is to avoid the pain that would result should the companies fail. I wonder if anyone has balanced this against the pain that will result from a government managed economy.
Isn't the former USSR economy famous for producing an excess of shoddy shoes? Will the US economy become famous for producing an excess of shoddy cars? Never mind. I think we're already there.
"Bailing out" used to be about using buckets or pumps to get stuff out of boats etc., so they would float better, or at least be drier.
But "Bail OUT" is now being used for schemes which throw money IN to sinking ships.
Reduce, reuse, cycle
Economists have no mathamatics training.
...Those who can count and those who can't
There's a giant elephant in the room that no one wants to mention.
As companies increase their market share, they reduce competition, and increase the damage to the economy if they fail. The nation-wide, interstate banks in the US are a creature of deregulation unleashing unmitigated greed on the banking sector. If one of these banks fails, we're in deep excrement. A handful of companies control effectively ALL the DRAM manufacturing in the world. further it seems that this handful of companies behaves as a monolithic block. They collectively banked on Vista being a huge driver for more memory. Too bad, so sad.
If these outfits want government help, here's how I propose we give it to them (It's actually about the US auto industry, but can be applied to just about any heavily consolidated industry with a few tweaks).
Once Fed.Gov involves itself in DRAM manufacture, the industry will find innovation illegal. Moore's Law died today, 12/15/2008.
Professor Allen
We are all fucked give it five years and there will be some many wastelands and gangs that all this talk will not matter as all you will care about is keeping yourself and your family's alive while people are tearing up the place trying todo the same thing, let just hope we take the time and think about other before a trigger is pulled for a half empty packet of pringles.
Is this a joke? Really? I think that Slashdot's being redirected to The Onion, I swear.
Time to go make some 'bad bets' and ask the government to bail me out if I lose.
Of course if I win and hit the jackpot, I'm not giving any to the government. I'll manage to hide the income on a balance sheet somewhere and use the government provided tax-loopholes.
I will then move my gambling operations to other countries knowing that if times get tough I can go back home and the government will welcome me with open arms and free money.
"Easy lending terms, a bright view of the future, and greedy/incompetent management prompted them to build too many new DRAM factories."
There. Fixed that for you. The view from down here was clearly one of non-sustainable growth in virtually every sector of the global economy.
Don't worry, it's just the broken window fallacy.
Vista still isn't good for anything, the end of the world shouldn't be coming this week.
Korean DRAM makers were bailed out before, at a time when they had a huge share of the market. This was also subsidized indirectly by the US through the world bank.
Well, should these companies not ask Microsoft for a bail-out? After all, it was the Microsoft marketing machine that fooled them and made them miss the rise of the Mac and Linux which have a much smaller need for DRAM.
Excuse me, but please get off my Pennisetum Clandestinum, eh!
because they don't make DDR1 ram anymore or at least cheaply.
they keep coming up with new dram technology while totally cutting off the old.
how are existing customers like us able to help by upgrading ram amount even if we wanted???
Will the government try to bail out SCO. SCO is providing employment for a lot of lawyers... that is good for the economy [sic]
BUY N LARGE
One quote I have heard is that this county is good at socializing the losses and privatizing the gains.
Look back, at other bail outs. In 1989, we bailed out the S&L's for $500B. However, this was really just bailing out banks that had decided to get into commercial real estate, which they lobbied hard to get into by getting rid of "antiquated laws" which stood in their way (of using the FDIC to cover commercial real estate loans). Had the bank investments in TX commercial real estate been profitable, I would not have received any windfall.
In 1992, the US bailed out ($500B) rich US investors in Mexico's oil pipeline industry. In many ways, these bail outs are written into the investments long before hand. For example, while as I do not support drilling in Alaska, I can't stop companies from drilling there for oil. However, when the Alaskan Oil Pipeline was guaranteed by the US taxpayer to be profitable, I did not get a any bonds to cover my "investment".
Now we hear a similar rallying call on how this is going to save our jobs, How this is not a bail out of Wall St. but Main St. Great, but where is the free market at work here? First of all, I want bonds, and second, in a free market, I want banks to issue bonds at a price at which I feel link investing at.
Over the last two years, the government has pumped a lot of money into banks (by offering ridiculously low terms), which they used to make loans at a much higher rate.
This is no longer capitalism or socialism at work. I think the better term is called THEFT. When King George II of England manipulated the economy of the colonies, it resulted in a revolution. However, when Pres George II does it, it is called an economic stimulus. This is class warfare. Unfortunately, most of us are too stupid to know what is going on. The rest are too powerless to change things. Any sort of class struggle is going to result in a crackdown like that used during the Counter Intelligence Program during the 1970's, or if disent gets more widespread, like that used in Chili in the mid 1970's. So we are just going pay for it, since we are better off sitting at home and paying to keep the peace.
Taiwan, Germany and South Korea all appear poised to offer some assistance to their DRAM chip makers.
Thank you Taiwan, Germany and South Korea for subsidizing my DRAM.
I guess subsidizing US cars though more than makes up for that.
This is why socialism doesn't work well on a global scale.
You can't even read your own bullshit lists:
June 4, 2007 - DRAM makers lose money, having ramped up for sales that never arrived.
Of course, because the companies themselves over-estimated Vista adoption rates, it's Microsoft's fault - especially considering lines from the article that you linked saying things like "most tech observers don't anticipate Microsoft's Vista will have much of a positive impact on PC sales until 2008".
Oddly enough, despite your 'DRAM makers are going bankrupt' bluster, none of them have or are going bankrupt at all. Unless you have something to the contrary?
"It does not do to leave a live dragon out of your calculations, if you live near him." - Tolkien
Mod me down, made a tit of myself.
I blame the drugs.
"It does not do to leave a live dragon out of your calculations, if you live near him." - Tolkien
Sort of brainstorming. Suppose "Bob" has a financially successful career, and he makes $100,000 more than he spends for 20 years. Bob pays income taxes on this money (35%, no medicare or medicaid because it is above 90k) and decide to invest the rest in "MunchkinCorp", a company that is set up in Panama.
The corporate charter of "MunchkinCorp" is to to invested money and make fiscally sound investments. Bob owns 100% of the shares of the company. The shares do not pay dividends, except when "Bob" turns 65, the MunchkinCorp will begin selling assets and paying Bob a dividend, wherever he is.
All of this is in the charter, and controlled by the trustee : Bob does not have direct control of the funds. The corporation really is a separate legal entity.
So, MunchkinCorp sits around for 20-30 years, buying and selling stocks. MunchkinCorp has to pay the capital gains tax on stock sales in Panama, which is I think 0%. Dividends received from stocks that MunchkinCorp owns would also not be taxed, and could be reinvested without penalty. MunchkinCorp does have to pay fees to the trustees that adminster it, as well as the Panamanian government. Bob may not actually be rich enough to be worth this much effort.
When Bob turns 65, MunchkinCorp has about 10 million bucks. Bob decides to emigrate to a country with lower income taxes, and collects his 10 million. Bob pfficially renounces his U.S. citizen, but heads back here a few weeks later on a tourist visa and rents a Ferrari.
Bob then emigrates to a nicer, Western country. He doesn't need anything but semi-permanent visas, and need not fear taxes, since his 10 million sits in the bank in his name. He can freely visit France and Sweden and all the other incredibly highly taxed countries, and laugh, paying nothing but sales taxes.