Bapcha's Stocks. The best insights into Silicon Valley & bio/pharma stocks, companies and their management.

Yes semiconductor fans, there is some good news to be had at the tail end of the year when everyone is sleeping [or in shut-down]. NAND and DRAM prices for spot delivery [turns orders] are up a whopping 10% week over week. The biggest increase since the last successful release of a MSFT OS [Win NT].

I called in to four of the big players, and only Samsung and Hynix are taking advantage of the turns orders to be had – which nevertheless produce gross margins of 0% [better than the negative ten percent that they got for all of the other orders]. For those not familiar with semiconductor sales, turns orders are ones that are booked and shipped in the same quarter [as opposed to contracted sales].

On the bad/ugly side, long-term pricing for NAND and DRAM dropped another 10% – and at this point, I do not even want to guess the gross margins on these products.

In six months’ time, NAND and DRAM would have shuttered 30% of capacity, and I fully expect pricing to recover after Aug of 2009. Till then, expect more torture if you are long semiconductor stocks.

Disclosures: Long SSTI, SNDK, INTC, SPSN.

© Bapcha’s Stocks, Dec 22, 2008.