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

To: Sonki who wrote (34292)	2/16/2000 9:58:00 PM
From: Katherine Derbyshire	Read Replies (1) \| Respond to of 70976

>>Can you explain why 300m is still under evaluation. I thought Intel took delivery of this well over a year ago and it may take a 9months or so to put in production. << I'm not sure what you mean about Intel. They are in the process of building a 300mm pilot line and have picked a production site, but they are not close to full scale production. In general, a 300 mm fab is significantly more expensive than a 200 mm fab. Building one only makes sense if the larger wafer size gives you enough more dice (=$) per wafer to make up for the higher cost of the fab. So the economics depend on overall volume, die size, and the value of the individual dice. If you're making very large, high value, high volume chips (like Intel), 300 mm is more compelling than if you're doing mostly short runs of smaller chips. Add to that the additional yield risks and costs of building a first generation 300 mm plant, and I don't think we'll see more than a handful of early adopters make the switch in this cycle. >>People start talking that it is not cyclical cuz this indusry in not driven by microprocessors only anymore.<< As I've said before, the "we're not cyclical anymore" crowd worries me, too. Even if unit demand climbs steadily, which it more or less does, the lead times involved in building a fab are going to create profit fluctuations for the chip companies and cyclicality for the equipment suppliers. >> Especially w. upcoming rate hikes and these equipments will have to be financed in rising rates. ???? No one has cash laying around i m sure. << Rising rates are one of the reasons why I worry about companies that make huge capital investments as a fraction of revenues. If you're Intel, and you have the best credit rating on the planet, and you're only spending 15% of revenues to build fabs anyway, then a quarter-point isn't going to matter all that much. But spending 80%+ of your revenues on capacity leaves zero room for internal errors or external shocks. Even if the banks are willing to float the loans, what happens if AG succeeds in slowing down demand in the world's largest market? Katherine