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Politics : Formerly About Applied Materials

AMAT 322.32

-5.6%

Jan 30 9:30 AM EST

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To: Katherine Derbyshire who wrote (58991)	1/17/2002 2:13:24 PM
From: Sam Citron	Read Replies (1) of 70976

As a rule of thumb, most industry experts believe that "reasonable" capex levels are about 11% of semiconductor sales. Can you provide some support for this statement? Is there a trend in the capex/sales data? Is there historical precedent for 11% as a golden mean that we will keep reverting to? And how quickly must we revert to the mean? Suppose, for example, that a rogue player like China were to decide to devote a considerably higher ratio of capex/sales in order to meet economic development targets for their next 5-year plan. They decide that it is a matter of vital national interest to surpass Taiwan and have the most efficient fabs in the world. Might that not increase competitive pressure on Taiwan to do likewise in order to stay competitive, thus setting up a dynamic for a longer than usual period of above trend capex? Sam@questions.com

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