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Politics : Formerly About Applied Materials

AMAT 226.05

+1.3%

Nov 14 9:30 AM EST

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To: Proud_Infidel who wrote (26785)	12/1/1998 5:32:00 PM
From: Katherine Derbyshire	Read Replies (4) of 70976

With all due respect to Ms. Strunk, it's fundamentally impossible for a sector to grow faster than its customers over the long term. If the equipment industry grows faster than the chip industry, it will consume a larger and larger fraction of chip industry revenues, thereby squeezing chip industry profit margins and forcing reductions in capital expenditures. Capacity building in excess of market growth is what got us into this mess in the first place, remember? I follow Ms. Strunk's logic: chip equipment adds value, so chip companies cut other expenses and/or get faster yield ramps. I don't buy it though. A process engineer costs the same whether he works for AMAT or INTC, so the total cost of process knowledge across the industry stays the same, or goes up. INTC may hire fewer process engineers, but they then pay a premium to use AMAT's knowledge. Katherine

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