Bharat.
You comment correctly that , No new fabs have come on line. The only capacity addition is thru modernization to 0.20 and 0.18 process. The total demand is far outstripping the extra yield from fab modernization.
Morgan, the CEO of Applied Materials, recently commented enthusiastically on rising DRAM prices and then added that orders haven't yet shown up on AMAT's doorstep. Certainly going from 0.20 to 0.18 microns is mostly a factory retrofit as compared to increasing yield by jumping to 300mm, which requires a new factory. Morgan says 300 MM is stalled because no one wants to be the first to do it.
That said, the question remains why, if the chip-makers are raking in the dough, they aren't bumping up capital spending. Is it just that they were burned by capacity increases before the Asian meltdown and want to avoid that again, as well as keep prices up by encouraging short supply? Or, alternatively, are all the chip-makers, including MU, looking past the current shortages to next year and seeing the possibility of a slowdown. Why put more capacity on line if you see a slow-down coming?
And in MU's case, that puts in jeopardy the, say, $3+/shr it has to earn someday in the dim distant future to justify its current price.
Just my $.02, but it seems to my the chip-makers lack of capital spending projects a slowdown next year.
Best,
--Steve |
