Futures Trading in Computer Chips? a Tough Commodity to Sell

By 1997, Bloomberg News | St Louis Post-Dispatch (MO), June 8, 1997 | Go to article overview

Futures Trading in Computer Chips? a Tough Commodity to Sell


1997, Bloomberg News, St Louis Post-Dispatch (MO)


In the late 1980s, the product development team at the Pacific Stock Exchange thought they had a sure-fire idea: a futures contract for computer chips.

After all, the tiny memory devices were fast becoming ubiquitous, turning up in everything from coffee makers to personal computers. Demand was soaring and suppliers were proliferating, especially in East Asia. All told, the perfect ingredients for a successful futures contract.

"It seemed like a natural. Chip prices were extremely volatile, jumping around from $4 to $30 and change," said Dale Carlson, a PSE spokesman. For most users of memory chips, "there wasn't any particular interest in where they came from, they just needed a reliable supply at a fixed price." That's where futures come in. Futures contracts, which trace their origins to ancient Greece and Rome, were created to allow producers, users, and investors to buy and sell commodities at a specific price on a pre-set date. They allow folks to hedge against the risk that prices will swing sharply up or down. Chipmakers, though, weren't about to concede that their products were becoming commodities like pork bellies and copper. "We had these manufacturers saying, `What do you mean my chips are no better than anyone else's?' " Carlson said. "We got a boatload of press because it was so novel, and we spent a fair amount of time and money. But we could never get the sell side interested." In the face of that opposition, the PSE scuttled what would have been its first-ever futures contract. The idea of an exchange-based chip futures market didn't die though. Both the Chicago Mercantile Exchange and the Chicago Board of Trade explored launching a contract. "We looked at it briefly and dismissed it as unworkable," said Ellen Resnick, spokeswoman for the Chicago Mercantile Exchange. After a more extensive study, the Board of Trade reached the same conclusion. In the early 1990s, the CBOT formed a task force with the Chicago Board Options Exchange to examine the viability of offering futu res and options on DRAM chips, the memory devices that are perhaps the most commodity-like chips of all. After visiting with major computer and semiconductor manufacturers though, several problems were identified, said Jim Borowicz, vice president of product and market development at the CBOT. …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Futures Trading in Computer Chips? a Tough Commodity to Sell
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.