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Politics : Formerly About Applied Materials

AMAT 220.28

-6.4%

Nov 20 3:59 PM EST

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To: davesd who wrote (9560)	10/25/1997 7:38:00 PM
From: davesd	Read Replies (2) of 70976

post 4 In 1995, the chip companies the semi cap companies and most analysts were sure that the supply would never catch up with demand and this bonanza was going to last forever. Fab capacity was low. Chip prices were high and margins were great, backlog was growing and fabs were projecting higher and higher cap spending.....at one count there were 155 fabs under construction or planned. And MU was going to make $17/sh this year. A migration to new existing 200mm .35 technology was underway.......Well we all know what happened in 1996. So here we are in late 1997 going in to 1998.....the same bullish attitude exists regarding the semi tool companies, but the fundamentals are very different. Fabs are in a situation of over capacity. Chip supply is alot higher than demand. Chip prices are in the toilet and dropping, most likely MU will lose money this quarter. We are in a situation of over capacity which seems to be getting worse. Fab pushouts are starting to happen. And a technology transition is looming on the horizon that may make Fabs postponed some of the expansion plans as we apporach the transition. dave

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