Formerly About Applied Materials Message Board

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Politics : Formerly About Applied Materials

AMAT 226.08

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3:59 PM EST

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To: Katherine Derbyshire who wrote (29770)	4/28/1999 6:41:00 PM
From: Math Junkie	Read Replies (1) of 70976

<<In the past, the DRAM companies have demonstrated a willingness to build capacity in the face of almost certain oversupply.>> I've been thinking about this lately, from the point of view of what market forces lead to the boom/bust cycles in DRAM. Because it's a commodity, the only limit on how many companies can get into the DRAM business, and how many fabs they can build, is how much production the market can absorb. Trouble is, nobody knows ahead of time when and at what production level that limit will be reached. Until it is reached, each individual company has an incentive to keep expanding, because the more they expand, the more money they make. And that is why the DRAM business MUST be cyclical, and the dream of sustainable growth rates that people speak of will remain just that, a dream.

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