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To: Tenchusatsu who wrote (105665)	7/15/2000 4:03:59 AM
From: NightOwl	Respond to of 186894

Me: <I figured that if DDR-I and Single Channel RMBS aren't going to be around long, the earnings in the chip equipment sector and memory sector will be fairly safe bets well into 2003.> Tenchusatsu: <Why do you say this? Personally, I'm afraid that too much capacity is being added a little too late, which only perpetuates the cyclical nature of semiconductors.> Me: I can understand that view. There's certainly room for disagreement. But I don't think the capacity being added will be a problem as long as this unusually rapid turnover in memory "standards" continues. Fragmentation is also expanding at the same time as capacity. In fact we have two types of fragmentation going on now. There are lots of new and old types of memory eating fab floor space. FcRAM, VCM RAM, SDRAM, DDR DRAM, DRDRAM, FRAM, FeRAM, SRAM, Flash, EEPROM, etc... And now more than at any time in the past, we have a significant decrease in the time between material changes in each of these segment products. I'm not a number cruncher but I have to assume that at least a portion of last falls spike up in SDRAM pricing was caused by the shift of material levels of fab capacity to DRDRAM runs. As new 300mm factories come on line I would expect that many of the old fab lines and equipment will be converted to make DSP, ASIC, and other products before they are closed entirely as inefficient for memory production. If all PC, notebook, and server memory was going to be only one of either SDRAM, DDR or DRDRAM for the next 5 years, the effect of added capacity would appear to have a much greater effect. If the new capacity coming has to service the demand not only for all those chips, but DDR-II, DRDRAM-II, and all the other specialty types it will take longer for the capacity to outstrip the demand for any one type. The memory fabs are showing a willingness to shift capacity back and forth between variants as demand and costs dictate. I would expect that trend to continue and provide at least an improved ability to delay the effect of increased capacity. The last time around all the fabs could do to avoid the over capacity bust was to close lines and halt new construction. They have more options today. At some point, assuming the efficiency in capacity improvements continue, nothing will help. Its still a commodity business at heart. But there's still tons of room for growth. The wireless revolution has yet to take off with any major product besides beepers and cell phones. The first generation of digital cable switches, hubs and routers is likely going to have to be replaced before it makes good on its promise for anything more than a platform for HDTV. Then there's ADSL and the copper services that have just scratched the surface of their demand for memory and other semi products. ...And my Fridge STILL doesn't talk to me yet. If just 2 of these markets finds a sweet spot in the next 5 years it will take a big bite out of global capacity. But that is of course just my inexpert speculation. Lord knows I haven't done the leg work developing market studies. ...Which I suppose is a good thing, otherwise I'd have to charge you $3,500 to read this "report". :8) 0\|0