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Technology Stocks : Semi Equipment Analysis

SOXX 302.84

+2.0%

Dec 2 4:00 PM EST

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To: Donald Wennerstrom who wrote (10438)	7/6/2003 9:50:46 AM
From: Kirk ©	of 95515

A good question for all of us that we need an answer for is what is going to make semi-equip spending increase, and most importantly, when? It will go up when they need to make more chips that require equipment they don't have. Lets do a thought experiment with "fake" numbers only there for scale. I have no idea if they fit any reality. Lets say you have a choice to buy a single 256Meg Flash USB Drive for $80 using a 0.1um process or you can get the same capacity at Frys by buying 8 seperate 25.6 Meg Drives for $6 each (25% cheaper). Would you hassle with carrying around 8 little drives where you have to remember what is stored on each? Or would you pay the 25% premium to have it all on one little drive you can carry around your neck on a string? Now would you pay a 50% premium? How about a 200% premium? Foundries will produce as long as the incremental wafer cost is less than the revenue generated. They become completely obsolete when nobody will buy the chips at any cost. For example, would you buy a P1-60MHz PC if you could get the processor for a penny? So... I think the canary to watch is the capacity and lead times for the advanced processes. It should have a snowball effect too as the more "new stuff" that comes on the market the larger the effect is to make the "old stuff" worthless. The evidence I am seeing is saying advanced processes are already at the "add capacity" stage of over 90%. When you see lead times go out, it usually means folks are waiting in line for a wafer start. Waiting in line means full capacity. I already saw this at Frys with the drives. You can buy 128Mb USB drives from many vendors for bout $60 and they had 64Mb drives on sale for $25. You pay a 20% premium to get a single drive. These are just fantastic things to have if you share files between PCs. BTW, here is a post where I talked about getting one of these drives. Message 19043745 That one is twice the memory as what I could buy at Frys for the same $60. I got some sort of closeout deal at Frys as they wanted about $100 to get that much memory the last time I was there a few days ago.

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