PSA Research Round-Up for the Week ending March 22, 2019

The Weekly Comment Summary
Things are moving fast in the world of EUV lithography. Pelham Smithers thinks the DRAM industry could be placing equipment orders by next year.

Reports / Flash Notes Summaries
1. Is Google’s Stadia a Game Changer?
2. Cybozu Inc (4776 JT) – A Growth Story: Taking the Tedium Out of Back Office Tasks
3. There May be Further Downside for ZOZO (3092 JT)
4. Daikin (6367 JT) – Still Expanding
5. Toyota and Suzuki Announce Agreement on Collaboration
6. Japanese Assemblers at the Geneva Motor Show – Impressions

Company / Sector / Thematic Comments at a Glance
Technology: Consumer Electronics / Gaming
1. Is Google’s Stadia a Game Changer? Implications for Console Makers
2. Sony (6758 JT) Announce 7-yr Marvel Movie Strategy
3. Gaming Moves That Caught Our Eye
Technology: Industrial Electronics / Precision / Components
4. Is a CPU Shortage Really Causing Higher PC Prices in Japan?
Chemicals / Materials
5. Hitachi Chemical (4217 JT): Life Sciences
6. Mitsubishi Gas Chemical (4182 JT) to Retain Saudi Methanol JV
7. Tri Chemical Laboratories (4369 JT) Maintains Momentum
Autos
8. Toyota (7203 JT) and Suzuki (7269 JT) Announce Details of Collaboration
9. Suzuki (7269 JT) Under Pressure on India Demand Concerns
Auto Parts / Machinery
10. Ferrotec (6890 JT) Takes a Stake in Toyo Knife (5964 JT)
11. HCM (6305 JT): Rises on Hitachi Sale Speculation
Internet / eCommerce
12. Trend Micro (4704 JT: Challenging Years Ahead
13. Will Rakuten (4755 JT) be Exempted from Separating Mobile Fees and Handset Costs?
Enterprise Software
14. M3 (2413 JT) Raises Dividend to ¥7/Share
15. Enterprise Software Stocks Movin’ on up… to the TSE First Section
Pharmaceutical
16. Eisai (4523 JT) / Biogen’s (BIIB US) Aducanumab Fails
17. Takeda (4502 JT) Begins its Debt Reduction Program
Miscellaneous
18. Toho (9602 JT) Raises Cinema Ticket Prices as Japan’s Film Business Bucks the Global Trend
Macro / Market
19.TSE Likely to Set TSE1 Listing Floor at ¥25bil
20. Buybacks / Cancellations
PSA Company Visits, Tours and Interviews
• Telephone interviews with Ferrotec (6890 JT), NGK Spark Plug (5334 JT), Nabtesco (6268 JT), Daifuku (6383 JT)
• Attended earnings meeting for: Tri Chemical Laboratories (4369 JT)
• Attended information meetings for: Mitsubishi Gas Chemical (4182 JT)

Weekly Comment by Pelham Smithers
In 1999, IGb of DRAM cost US$200 and 1GB of DRAM cost US$1,600, so the entry level iMac G3 with 32MB of RAM, which cost US$999, had US$50 worth of RAM included. Most people, though, bought the mid-range 256MB versions, which cost US$1,299. The additional 224MB essentially cost US$300 but substantially improved performance.
In 2019, the best-selling gaming computer, the Acer Helios 300, has 16GB and also costs US$999. There is 500x more RAM in the Acer Helios 300 than in the entry-level iMac G3, but of course memory prices have fallen. However, prices haven’t fallen as much as performance has increased. As a result, while the DRAM content of the Acer Helios 300 is US$96 – ie almost double that of the entry iMac - it has a quarter of the value content of the equivalent best-selling G3 iMac from 20 years ago (the 256MB version). In other words, at a given price point (ie US$999), there’s more DRAM in the box in dollar terms than in the past, but while the DRAM content in that box now meets demand, you had to up the DRAM content considerably to do that 20 years ago.
This discrepancy is noticeable in the long-term chart of memory prices, which have recently deviated from trend by a record amount. This in turn has meant that companies like Micron (MU US) have enjoyed record profits (US$18bil in FY18 OP vs US$2.3bil in FY00).