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Politics : Formerly About Applied Materials
AMAT 267.87-0.6%Dec 5 9:30 AM EST
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To: Big Bucks who wrote (23226)8/24/1998 9:35:00 AM
From: Katherine Derbyshire  Read Replies (3) of 70976
 
I'm a bear, but I think your outlook is probably a little too gloomy. There are fabs other than Dresden under construction, including several 300mm pilots. Despite the pain and suffering in the memory and microprocessor markets, the communication and networking people are still doing pretty well for themselves, and have reasonably high fab utilization. And while no one wants to build the last 200mm fab, no one wants to be caught short without the capacity they need, either.

I also think you underestimate the costs (and resulting revenue) of these technology upgrades. Switching to copper, low-k dielectrics, and DUV requires replacing nearly all of the equipment in the fab, plus significant changes in the facility infrastructure itself. At that point it probably becomes more cost effective to just build a new fab.

In your scenario, essentially no new capacity would come online until 2002-2003 at the earliest. Short of a global economic collapse, I think that's an unduly pessimistic outlook. I see designers taking advantage of all this excess capacity to design silicon into more things than ever before. I'm sticking by my prediction that things will start to pick up in mid-1999.

Katherine
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