Micron deal to outsource chip manufacturing
Eddie reported on an alleged deal with Micron and one of their competitors. I went to check out the article to see if this spelled bad news for Boise or not.
And it actually looks like not.
Micron, Nanya Tech agree tech license, chip JV: sources | Deals | Mergers & Acquisitions | Reuters
The sources said the first stage of the tie-up, which could be finalized next month, would include licensing of 1 gigabit, 68 nanometer technology for a new Nanya Tech chipmaking plant. The facility will start production of the new chips in the third quarter of this year.“That will be positive to the two individual companies but it seems we won’t see reduction of output from their cooperation,” said Brent Lin, a fund manager at Taiwan’s Capital Investment Trust.
So it seems like production in Boise is safe for now, but you have to wonder how long it can be safe when all of the newer chips are being produced outside of the state and country and the Boise plant keeps churning out the commodity products.
Here’s a concept on Micron: as long as the dollar stays low, Micron won’t move out of Boise.
However, the dollar is fast approaching a dramatic tipping point in which all global govts, their sovereign investment funds, and other private money managers worldwide….are all edging over to the exit door. In fact, this tilt in global portfolio rebalancing is looking very omnious.
A bad inflation number, gasoline spiking to $4/gal by summer, some pissed congressionals looking at the Fed’s contractual obligations to manage the dollar’s value, any of which could raise i-rates to protect the dollar.
It happened before, when Wright Patman of Texas, House Chair of the Banking Committee in the ’70s held hearings on Jimmy Carter’s inflation and the Fed fired short-timer William Miller, appointing Paul Volker to protect the dollar. I-rates soared.
Watch those commodity/gas/exchange prices…if the Fed defends the dollar with higher i-rates, Micron’s outtahere.
I remember that - the prime went to 22% and, meanwhile, the money supply pump was cranking even faster than the true inflation rate [GDP implicit deflator, not the CPI]. The market actually headed back up despite the prime rate but it killed capital investment.
And didn’t the PPI make a worrying change just recently??
BTW, real [inflation-adjusted] M1 is not exactly robust & investment tends to flow long-term to markets (countries) where there is evidence of long-term growth in real money supply.
Anyway, we need to all take a long look at the macroindicators (LEI, e.g.) The picture isn’t that awful for the US, but there’s no quick fix for reversing trends in capital investment… as in Idaho.
We can, however, work to increase capital investment in Idaho whenever we can.
Bill, what do you think about Areva?
We have 2 chances: slim and none.