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

To: Proud_Infidel who wrote (36438)	8/9/2000 5:19:46 PM
From: the hube	Read Replies (1) \| Respond to of 70976

How can they be so optimistic when the cycle is over?

To: Proud_Infidel who wrote (36438)	8/9/2000 5:37:01 PM
From: willcousa	Read Replies (2) \| Respond to of 70976

Pat, many thanx for great set of notes.

To: Proud_Infidel who wrote (36438)	8/9/2000 6:08:30 PM
From: pat mudge	Read Replies (3) \| Respond to of 70976

Brian -- You're far too generous. I'm transcribing without really understanding the product lines, so have lots of mistakes. I'm following the call to get a perspective on the over-all industry, and I've been overwhelmed with the strength of AMAT's message. If this report doesn't move the market I don't know what will. Here's the last of the Q&A: Q: clarification on 300mm bookings in 3Q? And DRAM capacity for 2H 2000 A: we recognize all bookings in quarter. Epitaxial bookings were from earlier. Nothing excluded. DRAM, seeing activity in orders, expect next few quarters to see increased activity. DRAM for Q3, above 15%, seeing higher percentage coming from DRAM. We know it’s under capacity right now. Q: Why more logic? A: Because of Internet, they demand more logic. Q: DRAM 20 to 25% in second half? A: Yes. Q: What’s happening in Taiwan? Accounts receivable were up. . .? A: Global business --- every region has different spending patterns. Taiwan spends more in first half. In Q3 bookings in Japan doubled. Talking to execs in Taiwan, they have shortage of capacity. Demand is higher than supply and they will continue to invest over next quarters. Q: Timing? A: One or two quarter rest, then coming back. Q: Europe? A: Very strong. Infineon, ST and Philips. Philips DRAM expansion. ST high demand for telecom products, also have plan announced fab in Singapore. Infineon expanding, including in US. Q: Seasonal slowdown next quarter? A: We don’t have a quarter seasonal break. Q: Depositions and DVD applications. . . does this mean others areas didn’t have record bookings? A: No, it doesn’t mean that. Every business is strong. Q: Lack of wafer throughput out of Taiwan --- does it have a quick fix? Long lead times A: Increasing from 3.4M to 4.8M per year. They still feel shortage is 1M per year. New Fab 6 will generate 35,000 wafers per month in Dec. Lead time, all I know lithography is 12 to 18 mos. Most have reserved a long time ago. Don’t see problem with DRAM ramping up. Q: Where do you see the most rapid growth? Detail on copper? A: Copper and PDC, will announce copper wiring module. It will help customer make transition from aluminum to copper with better yields. PDC and growth, 300%. Not just a new product, but strong (line?) Took time to establish infrastructure. Now have it all over world. Strong in Asia. 300mm we found interesting phenomena. First thermal processing equipment is good business. People starting to switch from batch furnace to single-wafer processing equipment. Wafer larger, risk higher. Expect in copper area it will help us have large momentum. In lithography, there seems to be steady rate of (?) with customers. Certainly a desire to extend current technology. We don’t see an issue in terms of impacting demand. We’re in transformation in industry – tighter geometries increase demands on equipment. Technologies are helping us get down to smaller geometries --- this requires higher level in fab equipment. Q: Any wafer shortages on front end impeding expansion? DRAM, also apply to flash? A: Flash capacity, 11% will be in this space. Six billion on flash, equivalent to 4 to 6 fabs, with 30,000 wafers per month. Equals 2M wafers per year. DRAM is probably balanced. If situation is not solved, then towards end of year there’ll be shortage. For both 200 and 300 mm. Q: Cost reduction? A: On-going. A lot of work on 300 mm. Success in that space is big driver. As rev. continues to grow we can get some margin improvements. From where we are to mid 50s. Q: why shortage? A: both supply and demand driven. Q: wireless handset components and sales? Update on ability to get components. A: Cell phone this year, probably 400m sets. Next year 550m sets. Some said drop in 20m sets. So many products need DSP as well as flash memory. People hungry for allocation of these devices. Set top boxes, too. Talking to people in Japan, people switching from LCD from black and white to color. You need more drivers. Q: stats? A: 2/3 of flash memory is in cell phones. Other 1/3 in different areas. General comment: We forecast things we know about. Yet what drives the industry is what we don’t know about. If you forecast out four or five years, we underestimate opportunity. A: respect with components, we are having some issues with supply chain. Not causing us dire financial performance. We are facing certain component shortages --- capacitors, discreet devices --- we are having to expedite parts. We’ve been upgrading supplier sources. [missed a couple questions] Q: personnel? A: Focus on development of people and retention. Retaining customer support is challenge. We recruit on a global basis. We get best out of universities. Q: Accounts receivable? A: We had a lot of shipments at end of quarter. DSOs went up a bit. Doesn’t give op. to collect. Nothing other than that. Q: On 300mm, how much additional would you be recognizing if you were? A: Not significant right now. Market share we’re taking is significant. It will be increasing part of business into 2001. By 2001, we’ll start to see some production and it will be more significant. We’ll recognize revenue based on customer acceptance. If everything is shipped and accepted it could be in 5% range. Q: Integrated modules, what do customers want? A: We look at them as a product. It does a better job than any other product. We believe in best of breed in product. We have best of breed. Customer acceptance depends on how well we do. We have to make it a real product. Q: Will customer be able to drop in a BrandX as part of package? A: It’s a paradox. You have to sell individual units and process modules. Q: CapX on cell phones? A: We don’t look at it that specifically. We get our forecasts by identifying every tool in every factory in every country. That’s how we build forecast. Customers some times will shift usage in factory. Q: Build up of cell phone inventories wouldn’t impact your business? A: Cell phones growing at huge rate and more significantly, they obsolete every two years. Right now shifting to color displays on cell phones. Q: low-key dialectics???? A: Pretty technical questions. We’ll take it off line. Q: Market size? A: not being widely used yet. Copper is not large volume today. Few hundred million at the most right now. Q: When will it move to ½ to 1B? A: A couple years, depending on acceptance. Q: Guidance? A: The silicon based business is growing at rate it has been. Non-silicon business is flattening out. No 300mm rev. in pot. But will be recognized in 01. Also some pre-production products being held back. Business is extremely strong and Q1 will be good, with good visibility in Q2 (2001). Q: BtB? A: We’re not publishing silicon base. If so, it would be with the industry. Q: $14B run-rate by end of this year. Is it sustainable? A: Number of people working on global plans. Certainly first half looks very good. We have to look at whole year. Can’t forecast entire year. But all vectors we see are positive. We see a good year. We’ll be at that run rate going out of 4Q. Q: Any excite tools? A: Those are new products. Q: Foundaries picking up slack in DRAM, does it change their buying? A: I’m not sure they have capacity. Q: Fab conversions? A: Lots of conversions. Some are being revitalized. 300 mm, nobody believed it would make an impact in their world before end of 2002. Q: When will orders be coming in? Will Taiwan be digesting current orders? A: They’ll come throughout 2001. Those plans won’t make a dent in 200mm ,.18 capacity. There is a need for more wafers out of Taiwan, particularly .18. To do that they’ll have to add capacity. Q: Gross margins? A: Focused on GM, and focused on material costs. As revs continue to ramp, we should gain a pt or 2 on margins. We’ll spend on R&D. We’re spending in areas that we don’t currently have. Q: Any new copper module customers? Anyone have entire suite? Market share? A: Yes, we’ll maintain 50% market share. A number of customers have bought all the pieces. We’re haven’t released copper wire module as a product. Yes, more than 7 customers. Q: Outlook on DVD? A: Nothings changed there. We’re focused on CVD. (I don’t understand product areas) Q: ERP installation? A: Fine, more than fine. Not impacting us at all.