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Technology Stocks : Semi-Equips - Buy when BLOOD is running in the streets! -- Ignore unavailable to you. Want to Upgrade?

To: Jacob Snyder who wrote (8898)	10/22/2000 6:14:09 PM
From: Charles R	Read Replies (1) \| Respond to of 10921

Jacob, <"Perceptions", IMO, are often the same as "wishful thinking". Please do not be offended when I say this. Everyone, me included, must constantly guard against seeing what we want to see, (or what we have a financial interest in seeing). It is a very common investing mistake, and no one is immune to it.> You make good point that I happen to agree with and I take no offense. I would be delighted to hear from people who have data to support or not support my perceptions. <1. the 1998 trough in bookings was lower than the 1996 trough. 2. the 2000 peak in bookings was higher than the 1997 peak in bookings. 3. Therefore, the amplitude of the swings in bookings has increased (doubled, in fact), in this cycle compared to the previous cycle.> Is this for equipment or chips? I ask this since my only experience is with chips and not equipment. I have not followed the equipment side much before this cycle. <4. the total bookings, at any point in time, represent the semi industry's consensus on what demand for chips will be in 24-36 months. Or, to be more exact, it represents the semi industry's best guess about what the demand/supply balance will be by the time they are using the equipment they are currently ordering.> We are in mostly in agreement on this. Though I thought the lead times were more like 18-24 months than 24-36 months. My impression is that a new fab can be brought up today within 18-24 months. Do you disagree? <5. The time between getting the equipment, and using it at full capacity, is going to increase, as the industry goes to 300mm. That means the semi companies are going to have to try to guess even further into the future.> I was not aware that 300mm increases the lead times significantly. I can understand that it can for the first couple of players (to get the technology right) but will the lead time for other players be significantly larger than what it is with 200mm? How much? <6. the further into the future you try to predict, the more mistakes you are going to make. (this last, I suppose, you could call a conclusion rather than a fact, but I believe it is supported by overwhelming evidence, and common sense).> 100% agreement here. <Therefore, I conclude there is little evidence the industry is getting less cyclical, and good reasons to think it might get even more cyclical in the future.> Clearly I do not share that opinion! <Your facts, please? > As I have said in the post you responded to, I do not have the specific data to back my perception. Though from reading your post it looks like we are talking about different things. I am more interested in the top of cycle for semiconductors and your responses seem to be more related to the equipment. Is that correct? Chuck

To: Jacob Snyder who wrote (8898)	10/23/2000 5:41:22 PM
From: John Cuthbertson	Read Replies (2) \| Respond to of 10921

"re: I think the players get a little better with each cycle" Jacob, I'd take issue with one of your points of fact: 4. the total bookings, at any point in time, represent the semi industry's consensus on what demand for chips will be in 24-36 months. Or, to be more exact, it represents the semi industry's best guess about what the demand/supply balance will be by the time they are using the equipment they are currently ordering. If only that were so, I think the industry would have been less cyclical! In fact, I think the aggregate orders have not represented any such "consensus" or the results of the companies' estimates about how much demand the industry as a whole would see. Instead it has been the result of each company's plans for how much they individually wanted to make and sell, almost disregarding the realities of the market as a whole. This was especially true for the DRAM makers. Every company planned to increase market share, but unfortunately the sum of market shares failed to expand beyond 100%! I think that one factor that may make for less extreme cycles in the future is the humbling of the Korean chaebols in the 1998 crisis. They are no longer going to have access to loans that they will never be able to repay to finance the capacity expansions they needed to buy market share by selling chips at a loss. This should make for less overbuilding. One danger to watch for is that the Taiwanese foundries could start going down the same road as the Korean DRAM producers, creating the same kind of problems. ==John C.