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Politics : Formerly About Applied Materials
AMAT 223.95+1.7%Nov 21 9:30 AM EST
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To: akidron who wrote (18020)3/21/1998 2:10:00 AM
From: David Rosenthal  Read Replies (1) of 70976
 
Akidron,

As far as Intel et al goes I agree with you. I would suggest one small addition. The underlying driving force is CPU saturation. Intel was happy to cede the low-end of the market until they discovered that that was where most of consumer demand was. They had to play there. Now, with tight margins, AMD, Intel and IDT are shrinking feature size to lower cost. Unfortunately for all of them, this will lead to more saturation and price cutting. The lowering prices of business PCs you mentioned has already started to show up. And my feeling is that low prices stimulate what is left of pent-up demand in the market. Once this demand is filled then the PC food chain will be left with lower margins and leveling sales. Some of the articles posted this evening say otherwise about leveling sales but some recent news items suggest to me that this may be happening.

Capital spending is definitely going to be affected. AMAT has a unique position of being able to supply so many different types of equipment but if chipmaker's money is tight the semi-equips will be hungry. And if Lam, Novellus or some other supplier lowers prices, AMAT will have to also.

This is not all doom and gloom but it seems that semi-equip growth rates will slow until international demand picks up.

Dave
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