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Technology Stocks : Cymer (CYMI)
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To: Investor2 who wrote (21535)3/30/1999 11:12:00 AM
From: Rustam Tahir  Read Replies (1) of 25960
 
Semi-Equip news from Merrill-Lynch:

Intel regularly meets with semiconductor equipment
suppliers and had just such a meeting last week.
ML: There were several important data points that came out
of the meeting. First, there is no clear timetable for the
300mm at Intel. We think Intel's enthusiasm for 300mm
technology at the operating level was squashed at the
business level. Craig Barrett knows the pain of a wafer
transition after managing the 150mm wafer transition at
Intel in the mid-80's. We do not think Intel will move ahead
with 300mm until it is economical and do not expect a
decision until the 4 quarter at the earliest. Second, Intel
now plans to qualify more than one vendor for each tool
abandoning the gold plated “copy exact” strategy adopted 8
yeas ago.. Both these decisions are core to slowing the
growth in depreciation expense- a top priority as the mix of
MPU business moves to the lower end.

Cypress Semiconductor is ordering equipment for an
expansion in its Bloomington MN plant. ML: It's a
small investment estimated at less than $25 million but
suggest that even the SRAM market is seeing better
times. Lam Research won the etch business.

Cap-ex spending at MU is
projected at $1.1 billion versus the previous $850 million.
The company has 15% of its wafer starts at 0.18 micron
and plans to increase that to 50% by the end of the year.
ML Analysis: MU is setting the pace in the DRAM
process technology “arms race”. As the leader in process
technology MU has the lowest costs and the strongest
cash flow because it is ahead in the move to 0.18 micron
process technology. Micron management is hoping that
many of their competitors cannot afford to maintain the
pace of investment. We think that will be true for the
marginal players- Acer, Vanguard, Mitsubishi. But
companies committed to the DRAM market cannot afford
to fall behind- Samsung, Hyundai/L.G.Goldstar, NEC,
Toshiba. We expect increased cap-ex spending from these
companies over the next 12 months. Improving
fundamentals in the DRAM market is core to our positive
outlook on the semiconductor capital equipment stocks.
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