Formerly About Applied Materials Message Board

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Politics : Formerly About Applied Materials

AMAT 262.92

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Dec 29 3:59 PM EST

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To: davesd who wrote (10082)	10/31/1997 12:23:00 AM
From: Kumar Nathan	Read Replies (2) of 70976

Dave: I see your point on bearishness. Let me attempt to convince you. The way Fab operates is totally different than what you think it is. Every chipmaker has a roadmap. In that roadmap there will be a clear direction on what way they plan on doing in the near future .Normally roadmaps will talk about following items. 1. Improvement in features. 2. Improvement in performance and 3. Improvement in chip size. Third point of improvement in chip size is very important. Many companies might say , for example, the same chip will be available in .25mu in Jan '98 or will say .16mu in Jun '98. Most of the chip makers will price their product in line with their roadmaps. The important point here is when chip makers announce their roadmaps they will consult with the roadmaps of fabs. There will be a perfect match between fabs roadmap and chipmakers roadmap. If fab is not upto the expectationof chipmakers, they will find some other fabs. Therefore unless the whole chip industry is in doldrum, fabs will always go for upgrade of equipments to higher levels. This means that there is certain amount of elasticity between equipment makers and chip industry. Further you are saying that the prices are falling etc., etc., This means that most of the chip makers will be forced to go in for technology shrink. meaning migrating from .35 mu to .25 mu or to .16mu. This translate to additional purchase of equipment to keep up with the requirement of customers. Dave, apparently your logic will reason you to be bearish. But when you go deep into chip industry's dynamics, you will certainly see a bullish atmosphere created due to this financial turmoil and drop in chip prices. Regards Kumar

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