We have a good opportunity to make money as long as the competition believes this kind of nonsense.
1. Large wafers make chip production more efficient and productive, not less capital intensive. In fact, the capital equipment that achieves improved efficiencies and productivity is worth more and chip makers, whose markets expand due to faster, smaller, cheaper, and less power consumption, are able and willing to pay more. In conclusion, the percent of sales devoted to capital equipment rises slowly while sales rise rapidly.
2. INTC capital equipment budgets have been extremely aggressive in the face of the economic and technology slowdowns. $5.5B on the heels of $7.3B doesn't take any heat off any competitors. Capital equipment is bought to meet company needs. Spending has never been monotonic. Capital spending cuts or increases by other chip producers is not influenced by INTC, but by market demand and their individual fab situations. The one company that is definitely and directly influenced by INTC, AMD, has announced plans to increase it capital equipment spending.
3. The new accounting rules have affected reporting for most of 2001. Companies have reported shipments in addition to revenues and bookings. Shipments have been less than revenues for most of 2001, so anyone paying attention knows that falling revenue will continue until sequential shipments start to rise and shipments exceed reported revenues.
The top semi-equips (AMAT, ASML, KLAC, NVLS)have had a nice run from last year's lows and are not cheap relative to historical measures. On the other hand, there are very few companies in any industry that have such favorable competitive positions and future prospects. |
