Formerly About Applied Materials Message Board

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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: Katherine Derbyshire who wrote (24559)	9/23/1998 5:24:00 PM
From: Duker	Read Replies (2) of 70976

<<Someone once described it to me as sort of like cracking a whip. The handle (the chip companies) moves just a little, but the end (suppliers to the equipment companies) moves a lot. The fundamental problem is that a fab is a huge expense, and it's hard to buy a fraction of one. So all the chip companies delay as long as they can, then splurge to satisfy their pent up demand. Meanwhile, unmet demand drives up prices, so people overbuild to try to capture some of those profits, creating a glut.>> Someone once described the relationship between chip companies and chip equipment companies as similar to the relationship between drug addicts and drug dealers. Highly profitable, with its share of risks...but the users will always come back as soon as they can get the money. Not very PC, but an interesting analogy just the same. --Duker

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