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Technology Stocks : Semi-Equips - Buy when BLOOD is running in the streets!
LRCX 157.09-1.7%3:59 PM EST
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To: Jess Beltz who wrote (4568)1/24/1998 5:44:00 PM
From: Ian@SI  Read Replies (1) of 10921
 
Jess,

When Kris Chellam, CFO of ATMEL during a CNBC interview about 2 weeks ago, was asked if the semi equipment companies would suffer also responded (paraphrased), "We [the chipmakers] have no choice but to upgrade to leading edge equipment. Providers of that equipment will continue to do well."

No sector is a monolith. Some chipmakers will do very well, possibly even some DRAM makers; though I wouldn't bet on any just now.

In the equipment area, I believe there'll be several winners. e.g. - ASYT with its SMIF family allows cash starved chipmakers to extend clean room life by years almost for free (less than $15M per fab). They dominate their sector and, for now, essentially have a license to print money. There are numerous examples.

To start with a presumption that there's an overcapacity situation that will take years to sort itself out is just plain wrongheaded. There are no statistics that show excess capacity for producing leading edge products. Excess capacity tends to be older stuff or practically obsolete stuff. There the chipmaker has a choice, upgrade, bleed to death, attempt to sell or shut down. The best managed companies with high demand for their products will continue to take share, buy more equipment. The others will go to capitalist heaven.

Determining which is which is the task that we face as investors.

Ian.
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