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Politics : Formerly About Applied Materials

AMAT 249.89

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Nov 26 3:59 PM EST

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To: akidron who wrote (20134)	6/11/1998 12:31:00 PM
From: shane forbes	of 70976

(np) 2 quick things on subsidies are useful to support new industries, but this one is mature,: One: mature does not imply slow growth here - we still should do at least 17% revenue growth over the next 3-5 years. This is a better rate of growth than 90% of the industries out there. Two: subsidies are available to attract capital investment in new industries and old industries whether they be in Korea, Oregon and Wales... It is upto the capitalists to decide whether to use the subsidies to build chip plants or Barbie doll plants. --- Also chips should power technology for the next 15-20 years at least. The explosive growth means there are plenty of niches available. To say that the industry suffers overcapacity and overproduction born of subsidy is painting the whole picture with the same brush. For instance to suggest that MPUs are in overcapacity or overproduction because of subsidies is laughable. SOCs are not in oversupply etc. DRAMs are in oversupply because Korea et al thought they could outspend the weaker companies - oops - if there isn't demand all those subsidies have just become wasted capital. It wasn't the subsidies - it was the lack of demand - Korea could just have easily decided to use the subsidies to challenge Coca-Cola or Pepsi - the money was available - the companies made the wrong strategic use of the capital. --- Like I said earlier subsidies will always be available - a company can make best use of these subsidies by investing wisely - making the wrong decisions like the Koreans did will come back to haunt them eventually. --- Shane.

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