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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: Doug B. who wrote (31616)	7/26/1999 1:54:00 PM
From: Katherine Derbyshire	Read Replies (1) \| Respond to of 70976

>> To stay competitive, new fabs are going to have to be built, or old ones will need retooling. It seems that the pressures from 300mm, copper, and feature shrinks are building to the point where this is increasingly true, and discretion in these purchases will become more and more inelastic.<< "Mr. Banker, I know I haven't paid back that last $1.0 billion I borrowed, and I know my profit margins are sliding into the toilet, but I really really have to have another $2.0 billion in order to stay competitive." The last few years have shown that some companies simply cannot or will not make the investments required. (Take a look at Japan's capex statistics just for grins and giggles.) No, those companies aren't going to be competitive down the road, and they know it. But they simply can't find the money and/or can't justify the risk/reward tradeoff to their lenders. Please don't misunderstand. I'm very bullish on the semiconductor and equipment businesses in general. But the "Lots of cheap PCs = lots of chips = lots of fabs" argument essentially assumes that chip companies and their lenders are willing to push huge sums of money into a pile and set it on fire. They haven't in the past, and they won't in the future. Katherine