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Technology Stocks : Semi-Equips - Buy when BLOOD is running in the streets!
LRCX 142.62+2.2%Nov 21 9:30 AM EST
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To: Robert Douglas who wrote (10078)1/25/2002 9:41:19 AM
From: Katherine Derbyshire  Read Replies (2) of 10921
 
Funny, the switches to 6" and 8" wafers didn't reduce capital spending. Why would 12" wafers have that kind of impact?

The idea that 300-mm wafers will reduce capital spending isn't new. Improved capital efficiency is the *only* reason to go to the larger wafers in the first place. (As readers of this thread probably know, the claim that "the new 300 millimeter silicon wafers can reduce line widths to just 0.13 micron" is simply wrong.) And yes, if demand stays constant, the larger wafers allow chip makers to make the same number of chips for less money.

But demand doesn't stay constant. Lower cost/function encourages new applications and increases the sales of existing applications. If that business model collapses, then everyone's in trouble, but that's not the argument Covello is making.

The reference to Samsung's cutbacks is a red herring. The DRAM makers have been suffering with endemic overcapacity for years. If Covello actually followed the sector, he'd know that, and hail the cuts as long overdue.

Similarly, the SAB101 issue will only surprise people who've had their heads in the sand (or somewhere equally dark) for the last year. Every industry conference call or earnings press release I've seen in the last year has discussed the impact of SAB101.

Usually, claims that the semiconductor equipment industry is dead make a pretty good buy signal.

Katherine
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