Gene and All,
Somewhat off topic at first here, the market overall concerns me right now. The S&P 500 PE of ~ 20 for ~ 5.5% (projected by a couple of seemingly knowledgeable economists) earnings growth for the S&P 500 in '98 is bugging me. Further, the fact that a number of people seem to be "poking their heads in the sand" about this and other "facts" bugs me further.
About Dauvin, there seems to be a contradiction with these two statements. "But growth would resume due to a gradual move from overcapacity to undercapacity in the second part of 1998, he said."
And, "Dauvin said there was even a chance of undercapacity in 1999/2000. The long-term market growth rate remained unchanged at 15 percent, he said."
At one point we were having possible undercapacity in the 2nd half of '98 and then he is not even sure we will have it in '99?!
I tend to give more weight to the nearer term statements, like this one, because if we can't predict next quarter, how can we predict next year? "He said he expected the industry would cut its 1998 capital expenditure plan by an estimated $20 billion."
To me, the central question at hand is this. Can the recent levels of capital spending be sustained? And most important, why or why not? Does anyone have an estimate of what the conversion to .25 micron was supposed to cost the chipmakers? My point is that they have already spent alot of money recently. I am open to other views, because I would like to be more bullish near-term, but I have a hard time finding evidence to support that view.
Also, my understanding is that the shrink from .35 to .25 for logic or DRAM increases capacity by approx. 75-80%. I would think that this alone would meet the needs of the market for the next year, minimally.
Month Shipments Bookings Book-to-Bill
Feb 96 $1,242.7 $1,686.5 1.36
Mar 96 1,255.6 1,447.0 1.15
Apr 96 1,353.9 1,360.5 1.00
May 96 1,365.7 1,186.7 0.87
Jun 96 (revised) 1,357.6 1,178.1 0.87
July 96 1,310.8 991.8 0.76
August 96 1,248.3 881.9 0.71
September 96 1,118.7 777.8 0.70
October 96 1,072.4 832.9 0.78
November 96 1,062.3 951.5 0.90
December 96 (revised) 1,032.8 1,058.1 1.02
January 97 1,034.2 1,116.2 1.08
February 97 (revised) 1,029.5 1,105.1 1.07
March 97 1,101.6 1,264.7 1.15
April 97 1,260.5 1,385.7 1.10
May 97 1,299.4 1,421.0 1.09
June 97(revised) 1,372.0 1,471.2 1.07
July 97(revised) 1,468.0 1,662.0 1.13
Aug 97(preliminary) 1,544.1 1.11
Sep 97 1,600.0 1,750.0 1.07
October 97 (final) 1,793.2 1,834.7 1.02
November 97 (revised) 1,875.2 1,844.2 0.98
December 97 (prelim.) 1,809.0 1,750.3 0.97
Teri
PS. The chart is just from my notes and can't be guaranteed to be right. Though I copied it from SEMI, basically. |
