Disappointing Vista sales have been cited as one of the main causes of proposed government bailouts. But the hopeful recipients aren’t American banks – rather they are chipmakers around the world.
The financial woes are affecting producers of DRAM chips, the main form of memory in most PCs and game consoles. While the global economic downturn has brought things to crisis point, manufacturers have long been feeling the effects of a major oversupply of chips which has driven prices down.
The IDG news service reports that firms produced too many chips partly because they found it so easy to get credit in better times (for example, for opening new factories), but partly because they forecast strong demand for Vista-based machines.
As anyone who’s used it knows, Vista is far more memory-hungry than its predecessors. Firms even thought they’d cash in from selling standalone chips to users who needed to upgrade their machines.
However, with sales lower than expected, plenty of chips were left on warehouse shelves. The oversupply is so serious that selling some types of chip will now raise less than half the cash they originally cost to make. To make things worse, many firms think demand will fall even further now consumers are tightening their belts.
Governments around the world are now facing tough choices about how to deal with the struggling firms. One theory has it that letting the weakest companies go bankrupt will mean those which survive get a bigger piece of the pie which may be enough to stave off further troubles. However, politicians are not only worried about job losses from failed chipmakers, but fear many banks would be fatally hit if the firms went under before repaying loans.
The problem is worst in Taiwan where it’s reported every major chipmaker is seeking government assistance. But officials in both Germany and Taipei are also considering bailout proposals.
Source:blorge
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