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Technology Stocks : Semi Equipment Analysis

SOXX 302.84

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Dec 2 4:00 PM EST

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To: Kirk © who wrote (6335)	10/20/2002 10:51:02 PM
From: Sarmad Y. Hermiz	Read Replies (1) of 95515

Kirk, Is going fabless a decision made for technical reasons ? Or is it for the same reason most people rent an apartment instead of buying a house: Simply, they don't have the money to buy! I agree with your points, and I'm puzzled that sometimes fab ownership is presented as a technical disadvantage. It just does not seem to be a big advantage to be restricted to using facilities that anyone can rent. A company like Intel can have two distinct areas of competition. Its chip designs, and its process innovations. Whereas a fabless company has only its chips and marketing ability. Besides, I don't see how a paid-for facility can be a liability, even if under-utilized. And for sure, Intel manages the utilization of its fabs very well. In the disk drive business, all the companies that outsourced all their manufacturing have dropped out of the business. Their fabless model simply did not survive the constant-change technology, and the coninual need to lower cost every month. In fact, the surviving disk makers are moving back toward an integrated manufacturing model. Sarmad

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