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Technology Stocks : Semi-Equips - Buy when BLOOD is running in the streets!
LRCX 148.32-3.3%Nov 14 9:30 AM EST
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To: Clarksterh who wrote (5702)6/5/1998 10:22:00 AM
From: Mason Barge  Read Replies (2) of 10921
 
I can see at least some indirect benefit to the cutback in DRAM production -- here's how my thinking goes. The problem with equipment sales for 256mb fabs (as an example) is not how much they need the equipment, but simply a question of whether they can find, beg, borrow or steal enough money to pay for it. If DRAM prices came back enough for the fabs to make a profit, they would have more funds. Also, they might even purchase some minor to moderate yield upgrades for the current generation of chips (such as 64mb fabs), if the prices are sufficiently high that it makes economic sense to capitalize some production efficiency. In other words, capital expenditures for yield don't make much sense if you're increasing your margin from -5% to -1%. So it's at least conceivable that a DRAM shop with 10MM capacity would cut output to 5MM and buy some upgrade equipment.

I'd agree with you on the larger, direct affect, though. But the importance of customers' financial considerations to the revenues of semi equipment co's has been greatly highlighted in the past six months, so there might well be some indirect benefit here.
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