Bill,
If the following story is the one you're meant, yes, that's one scenario. The other is that the current recovery will be continuous with the 300mm buildout. 300mm is no longer just a faroff dream. Infineon is already profitable. Their yields and lead time advantage over competitors will increase with each passing month.
The chipmakers no longer have as much flexibility in choosing when to go to 300mm. Last man in probably gets forced out of business. So, I believe a more likely scenario is that the current technology and capacity expansion is likely to run into heavy equipment orders for 300mm pilots and other new or improved technology; heavy foundry capacity expansion as fabs offload their excess demand; then finally the 300mm production build culminating in a peak somewhere around 4 years from now.
Nowhere in the article was there any acknowledgement of growth drivers such as the global economic recovery, the global communications network build out, the continuing strong growth in PC Units shipped (Free PCs haven't yet caused volumes to start dropping off. ;^)
In other words, the article is extraordinarily biased and highly suspect. As I commented yesterday, I've never heard of a billionaire journalist. I'm certainly not going to start taking investment advice from one of these under achievers. :-)
Finally, we should remember that The Information Network writes reports which it then wants to sell at hefty prices to whoever will ante up the cash. As such, it has to adopt controversial positions.
After all, who's going to pay an outlandish sum to have someone tell you something that you already know and believe. Wouldn't you be more likely to ante up if you hoped for some new information that could be used to help you become filthy rich?
In case you haven't guessed yet, I give the story very close to no credibility whatsoever. Not zero, but close.
Ian.
++++++++++++++++++
Flat 2000 for Semiconductor Equipment Companies Possible, Says the Information Network
July 23, 1999
NEW TRIPOLI, Pa.--(BUSINESS WIRE) -- Bookings for semiconductor equipment may peak in Q1 2000 and then drop to a low in Q4 2000
before beginning another recovery in 2001, according to The Information Network, a New Tripoli, PA-based market research
company.
Numerous negative indicators are pointing to another short-lived recovery in the semiconductor equipment market for 2000.
"We predicted the end to the previous equipment recession in our BusinessWire press release of July 27, 1998, with a 1999
growth of 10.4%," notes Dr. Robert N. Castellano, President of The Information Network, and feel vindicated that one year later other analysts, market researchers, and surveys are finally seeing that 1999
will not be flat after all."
This is a negative indicator!!! It sounds more like Joe Granville or Elaine Garzarelli crying out for anybody to listen to them because they had one lucky guess once.
However, the euphoria may be short lived and bookings could drop off in Q2 2000 and
continue through the year before increasing again in Q1 2001.
Now that's what I like. Weasel Wording. When the prediction doesn't come to pass, the turkey can claim that he only said "may" or "could". He was only playing devil's advocate, not writing about what he really believed. Sorry, Mr Journalist. I don't buy it.
Negative factors that will impact the equipment industry in 2000 include:
- Continual erosion in DRAM prices and over supply, negatively
impacting DRAM profits and capital expenditures
There's nothing different in this statement from what has been the case since the first DRAM chip was made. Price of DRAM has fallen on average 30% annually; and that rate has accelerated since about 1995. It's also the key driver of equipment purchases as fabs buy new equipment that allow them to become more efficient.
- Deferral of demand for 300mm wafers with the new SIA roadmap
indicating no large increases in die size - a major reason for
the migration to 300mm. The 300mm tools, which were designed and
evaluated for 0.22-0.18 micron features will need to be refined
to 0.13-0.11 microns, raising prices and R&D budgets
Not true. The die size on the 128Mb and denser chips is growing substantially. Faster than feature size shrinks will permit acceptable yields from 200mm chips to successfully compete with Infineon for much longer. The choice is get to 300mm or give up market share. Now that one consortium (Mot - Siemens) is there, the rest have very little choice but to move.
- Continued price concessions among equipment manufacturers
From the conference calls I've listened to, this practice seems to be abating or stopping altogether. More equipment plants are at full capacity with lead times increasing. The pressure to discount is reduced. So I suspect this is a backward looking statement not a forward looking one.
- Modest PC sales, affecting MPU and DRAM manufacturers and
signaling reduced fab construction,coupled with huge losses by
DRAM manufacturers in Korea and Japan in 1998 and by AMD
1998??? Geez, we're talking about 2000 and subsequent years.
PC unit growth is strong. Look at GTW's profits. Look at the Industry growth report. Stories will start appearing tomorrow.
CPQ is a sick company. The rest of the sector is doing quite well.
The author's statement re PC sales is not based upon any available facts.
- Poor yields with copper tools, which may signal a wait-and-see
attitude among potential users until equipment companies can
offer an integrated turnkey operation
More weasel wording which is not consistent with the growth being reported by both AMAT and NVLS. So who should I believe, a journalist with a highly questionable bias, or Morgan and Hill who would be subject to class action lawsuits and securities fraud if they knowingly gave out false information designed to artificially inflate their stock price. Sorry, journalist, you lose again.
- Interest rate hikes in the US, Japan, and Germany
Japan is at zero. End of story. Interest rates there are irrelevant. US at 5% isn't a big deal. I don't know the Germany story but suspect this is also just an attempt at misdirection by the journalist.
- Political uncertainty in Taiwan, which can abruptly affect
foundry operations
True statement, but probability of it occurring is so close to zero as to render it meaningless.
- Economic uncertainty in Argentina that could destabilize worldwide currencies the way Thailand's Bhat impacted worldwide
currencies starting in July 1997
Is this what the term "Yellow Journalism" describes? Sorry, saw that movie, we already know the ending. Further, so did the fed and the rest of the world bankers. The likelihood of the same mistakes being made is not much greater than China starting a shooting, bombing war with Taiwan.
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