I believe the issue of CSFB's "structural" issues came up on this thread. The following email exchange took place this morning
Hi Al,
I read their arguments. Their "secular or structural" argument is an expansion of the cyclical argument. The cyclical argument is that there is a slowing of end user demand because of the rapid build up during the "bubble" years and the maturation of some significant end user markets, e.g. PCs, cell phones. The addition of 300mm will increase efficiency (output/$cost) and absent any corresponding increase in end demand, decrease the ratio of equipment cost to semi revenue and slow rates of equipment revenue growth.
I don't disagree with any part of the argument stated above. What is missing is a discussion of the moves to copper, low K dielectric, and most importantly, 0.13u, 0.09n, and below. Wafer size is for production efficiency, but these other advances get smaller, faster, more powerful, less power consumption and traditionally, these lead to new products and increased overall demand, especially when coupled with the lower prices larger wafers allow.
So, the "secular" argument reflects an inability to see the future, a malady we all suffer, colored by a very severe technology recession/bubble hangover.
This was better than a recent analysis that said Moore's Law was the Achilles heel of the industry, but not entirely dissimilar.
At times like these, it takes a little faith to invest in technology. The faith is that Moore's Law and other advances will lead to new products and greater electronic, semi, and semi-equip revenue. If recent history is considered, this faith is somewhat akin to believing "the sun will come up, tomorrow..."
Cary
----- Original Message -----
From: Al McIntosh
To: SALSBERG@PACBELL.NET
Sent: Friday, September 20, 2002 8:23 AM
Subject: Structural Issues for SCE Group
Hi Cary
Attached is a copy of a CSFB's report where they predict the secular (or structural) issues will change long term growth rates and valuations of the industry. I would be interested to read your criticism of their views.
I can't give a direct link as the document is from the non-public portion of my broker's site.
I always learn from and appreciate reading your views on the industry and your favourite stocks.
Regards,
Al |
