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Technology Stocks : Semi Equipment Analysis

SOXX 312.76

+1.1%

Dec 8 4:00 PM EST

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To: Kirk © who wrote (3606)	6/22/2002 2:51:47 PM
From: robert b furman	of 95536

Hi Kirk, If I recall correctly several years ago semi makers were allowed to writeoff equipment over 3 years vs the previous 5 year period. This is huge.When one wonders why Intel stays on the tremendous Capex commitment - this is why. You have to stay ahead of the curve.Some of the life cycles of the chips made on these new equipments don't go 3 years.If you can stay on the leading edge of equipment and the chip still demand high margins then you can depreciate the equipment over the 3 years. Take AMD - they will complete their transition to .13 micron this year. Intel nailed their transition last year 200 mm.This year they'r completing three 300mm lines. When AMD gets caught up they'll still be behind.They'll have 200 mm.13 efficiencies and Intel will kill the margins with 300mm.13 microns. The 300 mm wafers offer such huge capacity 225% more than 200mm not all companies can use the capacity.That's why I think they stay so competitive on cutting prices - they need market share to drive AMD broke and keep the 300mm edge over AMD's200mm higher costs. JMHO Bob

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