Semi-Equips - Buy when BLOOD is running in the streets! Message Board

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Technology Stocks : Semi-Equips - Buy when BLOOD is running in the streets!

LRCX 147.44

-0.6%

Nov 17 3:59 PM EST

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To: Jay M. Harris who wrote (4186)	12/29/1997 6:03:00 PM
From: Ian@SI	Read Replies (2) of 10921

Jay, Thanks for the assumption details. I believe there's a key difference between now and 1996 related to the technology cycle. The 4Mb chip reigned supreme; had done so for nearly 4 years; went into a significant oversupply situation after almost 4 years of below trend price decreases created a huge windfall opportunity for any company with a $B to throw at building a DRAM Fab. There was no imminent technology change threatening it during the 95 to early 96 window when the 4Mb chip met its demise (from a profit perspective). As a result, equipment investment slowed markedly. What's different that may cause 98 to be different from 96? 1. Technology shifts: 16Mb DRAM is almost dead, being replaced by the 64Mb chip - another chip which is likely to have an abnormally short life. 2. Increased automation opportunities: Greater automation of fabs is creating opportunities. 3. Reduced feature sizes. Dropped from .50æm to .35æm and now .25æm creating demand for new equipment. 4. Improved SMIF technology extending Fab life by years. DJ Newswire story this morning quoted NEC executive describing clean room technology extending fab life by 6 years. While the company wasn't mentioned, this did sound a lot like AYST's SMIF products. Will all companies prosper during the next couple years? Definitely not. Will all companies approach a PSR of 1? IMO, definitely not. There's likely to be some significant winners. The Street has not discriminated but has treated the sector as a monolith as if they were all producing commodity products. I may be wrong, but I do believe that substantial money is sitting on the table; and that the Street will realize that sooner or later. Ian.

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