I concur with the long term posts also, but want to throw in one caution. As detailed a few posts back, the upturn part of past cycles lasted a minimum of three yeras and most analysts/companies forecast the same this go-round. The caution is that the "downturn" this time was only 12-18 months and not much of a downturn relative to past ones. We cam out of it with DRAM and some other commodity chips pricing still depressed and that has only gotten worse recently. So the excesses of the last upturn weren't shaken out. To counterbalance this on the positive, DRAM unit shipments are up a good >20% in 97 vs. 96, and other chips unit growth is similar or better. The rapid shift to .25 and.18 with 300mm looming, and new processes(Cu; low k dielectrics,etc) require a massive retooling. The existing field base of equipment is obsoleted much quicker. So like it or not if you are losing money or not, if you want to be in the game, you have to spend.
But back to the caution- unless we have continuing high PC growth and concomidant DRAM demand increases, to hopefully suck up the existing overcapacity as too many DRAM competitors chase the same market, a major hiccup could be looming. But even so, how long would such a hiccup last and how much would it affect Applied?
If your time horizon is such that you could wait it out, then I believe our risk is small. On a macro level, if the U.S. were to hit a recession or worse, then of course all bets are off. |
