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Politics : Formerly About Applied Materials

AMAT 225.18

-1.5%

3:59 PM EST

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To: Katherine Derbyshire who wrote (30764)	6/1/1999 11:19:00 PM
From: Clarksterh	Read Replies (1) of 70976

Katherine - That's an excellent point, and its certainly possible that a shift away from climbing ASPs is coming. Such a shift would require significant changes in the fab business model, as it would make paying for new technology more difficult. I think you missed my point, which was: 1) That communications chips are, in general cheaper than the ASP for the PC sector. (I don't know this for sure but I'd be surprised if it weren't true) 2) Communications chips are not (repeat not) lower margin than PC segment. (This is approximately true, at least for the companies I follow). 3) As PC semi's stop growing, and communication chips make a bigger piece of the pie, the ASP for the whole of the semi world will decline even though the ASP for each individual sector continues to increase. (This is complete speculation, but there is no reason it is inherently false.) This may break the empirical model which says declining ASP for the whole semi industry signals a decline in cap ex.. As I have said before, I'm suspicious of 'this time its different' arguments, but I put this forward in the interest of debate. Clark

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