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Technology Stocks : Applied Materials No-Politics Thread (AMAT)
AMAT 328.01+1.8%2:52 PM EST
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To: TI2, TechInvestorToo who wrote (8870)2/13/2004 10:12:23 AM
From: Kirk ©  Read Replies (2) of 25522
 
I actually believe there will be such a capacity shortage, due to under investment in new equipment, that chip makers who have under invested will pay nearly anything to add capacity. We might even see many companies that have gone fabless decide the only way to make sure they have product during good times is to have their own fabs. IF this happens, AMAT, LRCX, etc. will have huge surges in profits as they can charge pretty much what they want in a market where demand far exceeds supply. I'm guessing we'll see these profits in 2005 unless the World enters a new recession.

For example, Agilent now can sell to the highest bidder its new chips but when it was part of HP, HP could dictate how much was spent on R&D to deliver chips just for HP... at transfer prices. HP now has to buy chips on the open market while IBM still has fabs...

Cary's play on Altera and XLNX could work out or they might run into capacity problems where they have to be taken over by Intel or IBM which would have the fab capacity... or Intel and IBM sell them the extra capacity and get the lion's share of the profits.

The question I guess is what will be more valuable in 2 years: Fab Capacity or IP?
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