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Technology Stocks : LSI Corporation
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To: Tony Viola who wrote (21183)1/24/2000 12:46:00 AM
From: Grand Poobah  Read Replies (2) of 25814
 
Will the industry ever stop being cyclical? I doubt it, since the industry seems to be especially sensitive to the inventory/price cycle. It may become less so as the foundry industry grows and the industry as a whole grows, but the fact that billion-dollar fabs are absolutely huge capital investments will continue to dwarf all other factors for a long time. It's hard to sink a billion dollars into capital expansion when times are lean, but that's what will have to happen routinely in order for the semiconductor business cycle to be eliminated.

On a side note, DRAM is projected to be in undersupply for the next year plus. The fab capacity constraint that everybody was talking about in the first half of last year (while I was arguing that it wasn't that serious) has finally begun to rear its head. What this means for LSI is that its investment in Gresham should finally really pay off over the next year. Assuming, of course, without any evidence to the contrary, that their yields at Gresham are good.

Regards,
G.P.
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