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Technology Stocks : Cymer (CYMI)
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To: Walt Street who wrote (16359)4/7/1998 9:34:00 AM
From: Bryan Steffen  Read Replies (1) of 25960
 
RE: The days of high profit margins are gone, unless chip makers cut production costs big time and accelerate production. This means much cheaper computers, but many more of them as sub $500 computers will make the "PC in every home" vision a reality .

I don't think you would find many people to disagree with this comment. The concern I have is the impact of this move for the semiconductor companies and equip manufacturers like Cymer. Some will argue that it is a good thing. I would argue that it will slow the semi companies' advance to new equipment/smaller architectures.

My reasoning is this. 1) As cheaper PCs create greater market penetration, they create tremendous margin pressure. 2) In order to combat margin pressure the Intels of the world pump more volume. 3) They will also try to stretch any given processor's market life as long as possible. Therefore that means a slower advance toward smaller architectures.

I don't think we're talking about years in delays, but maybe Moore's law gets pushed back to 19.5 months instead of 18. Cymer of course will still participate in the moves to smaller architectures. But it means that we won't see the results of that until later this year and into 1999.

Maybe this is the reason for NYCNPBBKR comment: Rumor has it that Cymer is going to beat earnings estimates this report but will warn on the next 2 quarter's earnings.
Message 3955223

Bry
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