Formerly About Applied Materials Message Board

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Politics : Formerly About Applied Materials

AMAT 252.25

+0.9%

Nov 28 9:30 AM EST

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To: 16yearcycle who wrote (14323)	1/8/1998 10:37:00 PM
From: davesd	of 70976

Gene...I agree with all the supply and demand stuff you posted. The important question is...why is DRAM price going up and what impact will it have on AMAT?? My opinion is that DRAM manufactures are idling some capacity to reduce the supply of DRAM down to the demand level. This is great for Some DRAM manufactures....it is bad for PC makers and consumers of DRAM. As for AMAT....this is fairly neutral.....the supply/demand is being balanced by reducing supply...that means that less DRAM is being produced therefore, less tools are being used. As soon as DRAM starts pushing the profitable level....the tools that had been moth balled will be brought back on line, so in the future, FABs will be able to bring on capacity with existing tools. In other words...there is still overcapacity of tools and DRAM manufacturing capacity. The same thing happened in mid 1996...Koreans and Japanese cut back production for awhile and DRAM prices moved up....but it wasn't long before they fired up the idle production lines and created a glut again. You also mentioned that units sold will increase well this year....The bit rate growth has been about 90%...which is very high. However, the migration from 4M to 16M added 400% capacity to each chip and now the move to 64M will add another 400%. Therefore, the number of chips is not increasing nearly as fast as the bit increase. dave

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