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

To: Lone Star who wrote (33866)	1/19/2000 3:24:00 PM
From: Big Bucks	Read Replies (1) \| Respond to of 70976

Lone Star, As to the cost of fabs, whats your point? My point is based on historical recollection that when interest rates are going up the semi-industry tends to cut back on fab expenditures. I'm proposing that it may become cost prohibitive for new fab expansion, except for the INTC's of the world. When all the cost projections and profitablility projections are laid on the table it may not be profitable to build a $2B+ fab that won't be profitable or paid off for 10+ years, especially when high interest rates are taking away the profit margin potential. Consider that it would take $200M+ profit per year to just break even on a $2B investment. Then add on the overhead fab operation expenses and the number probably approaches $300M+ cost per year just to operate each new fab. Where is the profit potential. This could cause some fabs/chip manufacturers to cut back on their growth plans short term until a better margin/profit potential exists. The implications are that if fab expansion decellerates/declines so will the sales of semi equipment. Just my opinion, BB