Applied Materials No-Politics Thread (AMAT) Message Board

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Technology Stocks : Applied Materials No-Politics Thread (AMAT)

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To: robert b furman who wrote (17206)	1/15/2006 3:30:52 AM
From: etchmeister	Read Replies (3) of 25522

I thought Samsung's 8% reduction in Capex is not a big indicator of the industry in general Samsung talked improving Capex efficiency and they gave an example (in particular $ spent for buildings vs $ for equipment); if a fab is running at 50k wafers/month they will "cram in" additional capacity and extend it to 60K; they are trying to save $ on brick and mortar. And if one applies this to 3 to 5 fabs you end up with one additional fab while spending little on brick and mortar. (that's somewhat different what the capex cut headline implies). Samsung's total capacity was quoted 800k/month!!! Samsung spending will be heavily frontend (CY)loaded (of course the sell side will now retreat from its no upturn strategy/tactics to a cycle peak/order growth slowing scenario). Vista is expected to be big driver with memory requirements between 1 and 2 Gb Fab expansion: Samsung Fab 14 (100% NAND) from 30k wfr/month to 60 - 70K wfr/month ASAP (1H 2006; that's probably driving strong order growth in first half) Samsung Fab 15 is currently under construction and will start production 8/1/2006 with 15 to 20K wfr/month by end of the year (2H 2006) So we should see a pretty strong uptick in orders in Q1; question is whether they look strictly at order growth (which really does not make sense as Gottfried pointed out) or are they going to look at overall earnings potential for the next up cycle? Short interest has been relatively low which could imply we are seeing "real" buying opposite to short sellers buying. Also option ex could provide some hints - shorts seem to be banking on options to expire worthless.

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