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Politics : Formerly About Advanced Micro Devices
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To: Charles R who wrote (107476)4/23/2000 9:45:00 PM
From: tejek  Read Replies (1) of 1572958
 
The question is at what capacity level? Is there more capacity being put in place than there will be demand in a year or two?

I believe there are 3 new fabs coming online in the next 2 years.......Dresden and Intel's Chandler and CO fabs. Do you seriously think this will undermine the demand/supply equilibrium? That is not much additional capacity for an industry that is growing at roughly 15% a year.

It is nice to see investment in capacity at the bottom of the cycle but the rate at which capacity is being put in place today is somewhat disturbing.
There is little question that we are in the upward leg of the semi cycle. The question is how long will this go on? Especially if the bubble bursts?

Chuck

P.S.: It took Japan about 10 years to recover from the effects of the economic down cycle when the "bubble" burst in 1989.

Japan's gov't announced last month that Japan is back in recession.....so it has not recovered truly. And while I think there are some similarities with our stock market bubble and their Nikkei bubble, I think that's where the similarities end. There was a multi focus to the Japanese bubble that included their real estate market, and unlike the Nikkei, it has recovered hardly at all. The S. Valley is about the only place in the US that compares and were it to burst, its effect will mostly be felt from S. Jose to SF.
So I don't think we are in the same danger as the Japanese economy was back in 1990.

But more importantly, what has prevented Japan's economy from moving back up, has been the gov't's unwillingness to implement the hard reforms that are required for the transition the Japanese economy must make to remain competitive. Consequently the economy has moved sidewise for the past ten years. Japan has some of the most worried/scared, well fed people in the world. Its not likely the US would make the same mistakes if things fell apart here; only because we have been trying to coach Japan for the past 10 yrs to do the right thing. ;~))

ted
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