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Politics : Formerly About Applied Materials

AMAT 318.63

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Feb 3 3:59 PM EST

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To: Big Bucks who wrote (8072)	9/21/1997 8:48:00 PM
From: olduvai5	of 70976

I'm new to this thread and have been intrigued by the current discussion re: efficiency of scale (300mm wafer size) vs. high levels of integration (possible decrease in chip demand). One factor not discussed yet, which I believe will be the dominant factor soon, is the spiraling costs associated with tooling up. Projections of fab costs I have seen for 300mm lines will be on the order of 3-5B within the 4 year time frame. Given that the obsolescence cycle requires retooling at 3-5 year intervals, the capital costs associated with these lines will have to be covered in the price received per chip. I think this will prevent the kind of collapse in CPU and VLSI prices we have seen in the memory market. If I'm wrong, then only the 4 or 5 biggest chip manufacturers will survive. There was an interesting article in a recent Business Week about SGS Thomson's drive to move into the top 5 semi companies in order to ensure their survival in the coming Texas Death Match. It sure looks like Samsung, Hitachi and a couple of others are in a giant game of chicken! olduvai5

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