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

To: Ian@SI who wrote (33952)	2/1/2000 12:31:00 PM
From: Lone Star	Read Replies (1) \| Respond to of 70976

Ian, dang, don't have the link, but PC makers are still top five chip buyers, then the next four were comm. companies. But, your input is still valid because the shift in weighting is evident. No one would be surprised to see comm. companies surpass PC guys in near future. of course, as everything converges it may not be so clear! The press release I refer to is only days old- maybe someone could post.

To: Ian@SI who wrote (33952)	2/1/2000 12:43:00 PM
From: Big Bucks	Read Replies (2) \| Respond to of 70976

Ian, How do you reconcile your opinion with the fact that CPQ, GTW, AAPL and DELL have each warned this quarter of shortfalls because they couldn't get sufficient chips to meet demand? You need to separate CPU's from the rest of the chip market. Already we are seeing DRAM prices starting to fall due to excess capacity on investments made last year. There are very strong specialty chip markets, no doubt, like flash, DSP, telecommunication etc. Fabs are churning out chips like there is no tomorrow. I'm saying that there is a finite amount of chips that the markets can absorb and am speculating that overcapacity will start to rear its' head by summertime, which will be preceded by a reduction in chip prices as competition for sales/business heats up between chip manufacturers. Competition for market share in profitable device areas seems to always lead to a glut of chips due to saturation as competitors overproduce and prices decline which reduces margin profitability. There will be certain chip sectors that will remain "hot" where there are dominant manufacturers with superior technology like DSP's, Flash, and high bandwidth will do extremely well, but the chip market is much bigger than that. In any case it will be interesting to see if the consumer market can support the increasing output of the manufacturers. We have seen this same scenario played over and over again.... overbuild, overcapacity, glut, slowdown. Also keep in mind the Fed is wanting to slow down the overheated economy and try to reduce consumer debt loads which are at an all time high which means less "discretionary" disposable income if the economy slows down by virtue of interest rate hikes. Just my opinion, BB