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Politics : Formerly About Applied Materials

AMAT 330.24

-2.9%

3:44 PM EST

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To: John Trader who wrote (47795)	6/9/2001 11:46:56 AM
From: Katherine Derbyshire	Read Replies (2) of 70976

>>There seems to be a bit of a disconnect between the statements from carriers such as "data traffic doubling every 100 days", and the idea that this sector will be in the dumps for years. I don't know the answer, but it sure seems like the money will come from somewhere to meet user demand for this build-out of the internet.<< There may be an analogy to the semiconductor industry here. In the 1996 downturn, unit volumes were extremely high. DRAM bit volume skyrocketed, in part because DRAMs were suddenly very cheap. But none of the DRAM companies were making any money, so none of them bought equipment. Equipment sales recovered when chip average selling prices did. Likewise, how does the cost of bandwidth affect data traffic? If the bandwidth suppliers have no pricing power, then they have no incentive and no ability to build more bandwidth. Katherine

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