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Politics : Formerly About Applied Materials

AMAT 235.24

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To: Big Bucks who wrote (15226)	2/1/1998 12:24:00 PM
From: Clarksterh	Read Replies (1) of 70976

BB - Re: October was start of another down cycle. The past down cycle in '96 was due to overcapacity in all segments of the semi market (commodity and logic), and it never really had time to go thru a complete cycle before it was interupted by macro-economics in SEA. Thus, I would expect that this 'cycle' will be substantially different than the last one: 1) This 'cycle' started from a base where there are many semi manufacturers who haven't upgraded their equipment in 2 years (a lifetime in the semi industry). At the beginning of the last cycle (early '96), everyone had lots of the newest and best equipment. They could afford to delay new purchases then, but it is a dangerous game now. 2) This 'cycle' is largely driven by uncertainty. 'What's going to happen with Japan?' 'Is China going to devalue?', ... . The dynamics of this psychology are likely to be very different from the driver of the last cycle - over-supply in almost all segments. The last true cycle was like a river during the dry season, but this 'cycle' is more like an artificial dam put across the river upstream. When it goes it is really going to be a flood. Clark

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