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Pastimes : The Justa and Lars Honors Bob Brinker Investment Club Thread -- Ignore unavailable to you. Want to Upgrade?

To: MrGreenJeans who wrote (164)	7/9/2000 9:17:13 PM
From: MrGreenJeans	Respond to of 10065

Financial Times: Chip Slowdown, NOT Chip industry in $60bn race to meet demand By Louise Kehoe in San Francisco Published: July 9 2000 19:39GMT \| Last Updated: July 9 2000 23:54GMT The world semiconductor industry has embarked on an unprecedented $60bn spending spree on plant and production equipment as chipmakers race to catch up with soaring demand and switch to new, more efficient production technologies. Construction of at least a dozen huge chip plants has either begun oris planned this year while many existing plants are being refurbishedor expanded. Total capital spending by the industry will jump 66 percent against last year, according to George Burns of Strategic Marketing Associates, an independent market research group. The record investment is likely to be overshadowed by even higher spending in 2001. Sue Billat of Robertson Stephens, the technology investment bank, estimates chip industry spending on production equipment alone, excluding construction costs, will top $80bn next year. Analysts say the result will be a massive increase in the production capacity of the industry over the next two years. It should eliminate the chip shortages that have dogged manufacturers in the computer and communications sectors in recent months. "It looks to me as if this [chip] industry is just getting off the starting blocks," said Jim Morgan, chairman and chief executive of Applied Materials, the world's biggest producer of semiconductor production equipment. "Only 2 per cent of the world's population have a personalcomputer and only 7 per cent have cellphones. This is just the beginning. We are entering territory that we cannot even begin to comprehend." The euphoria follows a severe downturn in 1996-1998 when the Asian economic crisis combined with a glut of personal computer chips to damp chip industry spending. Since then economic trends have been more positive. More important, PC manufacturers are no longer the dominant purchasers of semiconductor chips. Demand has grown rapidly for chips to be used in mobile telephones, cars and other consumerelectronics products. However, there are fears of an end to the boom in a cyclical industry in which production capacity and demand are seldom synchronised. The current pace of growth is unsustainable, says Mr Burns. "I hope next year will not be quite as good," he says. "A gradual slowing would be better than a severe reversal in 2002 or 2003." --------------------------------------------------------------------------------