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Politics : Formerly About Applied Materials

AMAT 318.63

-3.0%

3:59 PM EST

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To: Tito L. Nisperos Jr. who wrote (8211)	9/26/1997 2:29:00 PM
From: davesd	of 70976

Tito, DRAM is about 40% of the semiconductor industry....are you saying that AMAT no longer gets much business from DRAM manufactures?? Alot of the sales to Korea, Taiwan, Japan are DRAM sales. The huge growth that AMAT and other experienced in 1995 and 1996 was largely due to DRAM FAB expansion....when the demand for DRAM slipped and prices dropped and we went into a period of glut.....the demand for semi tools dropped....and AMAT's revs and orders went down with it. Recently the DRAM fabs have been buying again and the DRAM glut is getting worse...sooner or later they will have to put on the brakes again.....and reduce capital spending....All the news these days is that the DRAM glut is bad and getting worse...DRAM 16M prices have dropped below $5, which is lower than the cost of production for alot of the FABs.....I don't see how they will keep adding capacity as they are losing money at current prices. In the last 2 quarters the fabs have been adding capacity in anticipation of higher prices and so that they don't lose market share as the industy moves to 64M....so the glut is worsening....question is when will the semi tool companies feel the pain of the glut. dave

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