A Good Part of Bad Times Is Ending Soon

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Some of us have gotten some joy from this financial crisis/recession.

Those have been the people who have gotten some big bargains as the result of too much supply and not enough demand for certain tech-items: regular and flash memory, and bigger LCD screens.

Those days will be ending sooner than later, though.  As we explained a while back when we spoke about the memory industry, if you have to build (and especially if you have to borrow to build) big factories to make your product, you’re better off continuing to produce products even if you’re losing some money doing so.  That’s mostly because you still have to pay the loans back regardless of whether you use the factory or not.  The problem is that if everybody else you’re competing against is in the same boat because there’s too many factories making too much product, eventually prices sink to the point where the losses get too great and you start shutting down factories voluntarily or involuntarily by going out of business.

We have gotten to that point in all these areas.  Production has already been cut back substantially, and more cuts are coming.  Take a look at Digitimes, and you’ll see all sorts of articles about production cutbacks, layoffs and companies seeking bailouts.  To give just one recent example, shipments of large TFT-LCD panels in November were down over 20% from October (and about 20% from November 2007, so this isn’t a normal seasonal drop). 

These production cuts are bound to stop sliding prices, and you might even a price increase here or there sooner than you might think.

In other words, a word to the wise, don’t assume prices in these particular areas are just going to keep on falling like they have.  Get while the getting is still good.   


About Ed Stroligo 95 Articles
Ed Stroligo was one of the founders of Overclockers.com in 1998. He wrote hundreds of editorials analyzing the tech industry and computer hardware. After 10+ years of contributing, Ed retired from writing in 2009.


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