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Politics : Formerly About Applied Materials

AMAT 226.58

+2.9%

3:24 PM EST

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To: Gottfried who wrote (21923)	7/17/1998 6:17:00 PM
From: Joe S Pack	Read Replies (2) of 70976

Here is my take on how Y2K bug may affect chip industries. Given that there are plenty of bugs (meaning bugs in most software tools and embedded systems) it can be very costly. Two possible scenarios: 1) If chip makers (especially the ones in ASEA) realize that these bugs will be costly to fix them they can dump the existing generation of machines and tools and go for newer models. In that scenario AMAT will have great life. This I think is unlikely because most long-term contracts with the supplier should have clause for maintenance upgrade that should cost less than newer versions. And hence they would like to stick to the existing tools with incremental cost based upgrade. This will play well given the current sorry state of economy in ASEA and may take time to improve. 2) If they relize that these bugs are not costly but result in frequent shut down and disruptions of services due to incomplete fixes then they will get frustrated and have to go for newer models and tools that are Y2K compliant. I assume that most newer models and tools will be Y2K compliant. This is a big assumption though. Another possibility is these gadgets builders and tools vendors themselves have bugs that will require large attention than concentrating on newer models. Then we are back to square one. This will be a double whammy. I agree that Y2K bug is going to cost a lot. Another titbit. According one recent news SEC will shutdown securities firms and assign their accounts to somebody else if they are not compliant by the 4th quarter of 1999. This is not an advice rather a direct order. Moreover uncle sam is the slowest of all in US. There are several departments (DOE for e.g) are in very bad state as of now and it will be fun to see how both parties will position themselves to protect their hind. Now both are willing to allocate money to this monster bug. All the best. -Karun

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