Stitch,
Here is a different Carl Johnson post that is ostensibly on the semis, but is entirely relevant to drives as well:
exchange2000.com
Note the following excerpt, especially in light of your comments on the WDC thread about Taiwanese money coming into drives. Geez, these Asians are like bankers, except that bankers just find the next area to get a negative return on your money, while these guys are the entrepreneurs who create the next great place to lose money. Of course, the first guys in probably get all of these money back plus much more, what do they care?
(excerpt below, he is talking about the downturn in the semi equipment sector)
To answer your question: I still believe that the current downturn is an extension of
the severely over-capacitized state the industry was in during latter months of 1996.
Clearly, the move by a number of players to 0.25 micron delayed the inevitable
downturn. Also, the hell-bent for leather ramp in Taiwan got everyone believing that
the bottom of late '96 was the real McCoy. Whew! The Taiwanese are really hurting
right now!
If you talk to people who are closely tied with the equipment business they will tell you
that '97 was a bit of a fluke - real but a bit of an anomaly in comparison with past cycles.
We were looking for demand side weakness and it only materialized in a few
segments. Today, a different story can be told about the demand side (here is a chart
depicting the demand side weakness <http://www.infras.com/news/units.gif>. Help
me. If you have evidence to the contradict this data please present it.
I also believe this cycle is different because we have never witnessed a period where it
was prudent to borrow and spend on new fabs so you could make products that lose
you more money. Now that's a business model that I find utterly amusing. No
Limit-Poker? Strikes me as a complete and utter disregard for the "first law of holes"!
Maybe we could get an answer from the Koreans or, how about the Japanese!
(my note: of course, the drive sector has, except for the brief shining period between 1994 and 1997, seemed to operate on that model for most of its existence.) |
