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

To: pat mudge who wrote (36574)	8/10/2000 4:18:56 PM
From: Proud_Infidel	Respond to of 70976

Outlook for chips strong, US firm says SEMICONDUCTORS: Reports of the chip industry's demise are greatly exaggerated, according to equipment maker Rockwell By Dan Nystedt STAFF REPORTER Reports that tough times lay ahead for the semiconductor industry are wrong, say executives at one of the world's largest supplier of chip manufacturing equipment. And that's good news to companies in Taiwan, as the nation's semiconductor manufacturers are increasing equipment purchases faster than any other nation in Asia. A growing number of investment analysts have cautioned that the semiconductor industry's current growth cycle has hit its peak, as too many companies are building manufacturing facilities or adding capacity at a rate faster than growth in demand. But executives from US-based Rockwell International Corp disagree. "We think there is significant growth potential for the industry," said Timothy Garland, semiconductor and technology manager at Rockwell Automation, a maker of factory automation equipment. "A number of companies have continued making significant investments" in semiconductor manufacturing equipment. Worldwide spending on new semiconductor plant equipment is projected to hit US$60 billion this year, helped by demand for by mobile phones and consumer electronics sales, according to Strategic Marketing Associates, a market research firm. According to Gregory Geiger, Asia-Pacific president of Rockwell, although Asia accounted for only 6 percent of his company's worldwide sales, the order rate from the region hit 20 percent in the most recent quarter. He said that Taiwan leads the pack with the most equipment purchases, followed by South Korea. While much of that plant equipment is going to wafer fabs such as Taiwan Semiconductor Manufacturing Corp (TSMC, ¥x¿n¹q) and United Microelectronics (UMC, Áp¹q), a portion is also being sold to producers of liquid crystal displays (LCD), which are used in computers and mobile phones. According to Andrew Teng (¾H¦wÄi), semiconductor analyst at Taiwan International Securities Corp (ª÷¹©ºî), that Taiwan leads Asia in manufacturing equipment purchases should come as no surprise. He said some of the nation's biggest players -- including TSMC, UMC and Winbond (µØ¨¹¹q¤l) -- are currently trying to build capacity for 12-inch wafers. According to Teng, worldwide semiconductor sales have continued to increase, beating expectations each quarter. In the past month, VIA Technologies («Â²±) and UMC both reported July sales increased more than fourfold over the same time last year to NT$2.79 billion (US$90 million) and NT$9.33 billion (US$300 million), respectively. Production increases to keep up with such demand have kept TSMC's foundries in overdrive, spinning out a projected 41 percent more ice-wafers than last year. The company expects to make 3.4 million ice-wafers this year compared to 2.4 million last year. Increased orders are also coming from LCD manufacturers, which use similar plant equipment as semiconductor makers for the first phase of a three-stage production process. Technology transfers and agreements between Taiwanese and Japanese companies have increased exponentially over the past few years in the area of LCD displays. According to EnTrust Securities (¥Ã©÷ºî¦XÃÒ¨é) LCD industry analyst Tim Chen (³¯«Ø¥ú), the production value of locally made LCD displays is expected to grow by more than 400 percent this year. The huge increase in LCD production, he said, can be attributed directly to Japanese outsourcing. "The Japanese began outsourcing LCD production to Taiwan about five years ago due to intense competition from the Koreans, who were able to make the same quality products as the Japanese for a fraction of the price," Chen said. To regain a piece of the lucrative LCD market, Japanese companies have licensed technology for low-end LCD displays to Taiwanese manufacturers and collect royalties on those licenses. Chen listed Acer Digital Technologies, Chung Hwa Picture Tubes and Chi-Mei as the nation's top three LCD display makers. But, he predicted sluggish profit growth over the next few years due to oversupply. taipeitimes.com

To: pat mudge who wrote (36574)	8/10/2000 4:22:26 PM
From: Cary Salsberg	Read Replies (6) \| Respond to of 70976

Pat, I have enjoyed your posts on the COM21 (CMTO) thread and I would like to repay your efforts by commenting on AMAT and the semi-equips. I do not agree with the general concensus that this is a valuable thread. Certainly, the posters are intelligent and courteous and, definitely, a great deal of relevant news is posted. Unfortunately, it is excessively positive and hasn't come to grips with the current situation. We have just seen almost all analysts reiterate buys and strong buys and set targets in the $120 to $140 range. Why is the stock down? Why is the industry down much more? The answer is that faint roaring sign down river from us. We don't know how far off it is, but it is the waterfall. A recent post quoted two money managers who said the time to buy AMAT is over for this up cycle. You bought at $72, but 4 years ago it was $5.50. At that time it was the acknowledged industry leader with 25% of the market and share growing. How far and how long do you expect the price to increase before it falls to $25? If you are an expert short term trader, go for it. If you are like many of us, intermediate and long term investors, don't be fooled by yesterday's report or Morgan's comments. (Hill and Bagley have been far better prognosticators.) A purchase today implies that you feel confident with your estimates of the quarterly report 1 and 2 years from now. Not much discussion of 1 and 2 years out here. No comments on Brian's post which stated capacity is at $14-15B. No discussion about how long it will take or difficult it will be to increase capacity. No discussion about how the PE will move as the up cycle end comes closer. Much discussion about how the cycle will not end. I hope this warning helps you. Cary