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Technology Stocks : MEMC INT'L. (WFR -NYSE) The Sleeping Giant? -- Ignore unavailable to you. Want to Upgrade?

To: Zeev Hed who wrote (4599)	11/1/2000 5:03:13 AM
From: Andrew Vance	Read Replies (1) \| Respond to of 4697

Hi Zeev, You pose an interesting question, given the precarious nature of their relationship with VEBA. However, you never know if WFR would find intself in a similar situation as when IC capacity was highly constrained. Just prior to the last downturn, certain IC manufacturers, trying to lock in capcity at the foundries when cpacity was tight, funded some of the foundry expansion by buying or sharing the costs of the equipment for these IC foundries. these deals also guaranteed certain capacity allotment through the foundries or the test houses. If and when a situation starts to present itself and the 300mm companies see a problem on the horizon with wafer avaiability, one would think that $100M spread out between 4 customers would be a drop in the bucket relative to the cost of the 300mm IC fabs they will have built that would suffer during a wafer shortage. This would work out well since WFR would not necessarily carry the depreciation of that equipment on their books and thereby generate higher margins. It would also lock in a few customers for the time being. This is entirely feasible. What is also feasible, given the current share price for WFR and the continued desire to dump it by VEBA (we think this is still an option), anyone who really thinks their wafer supply might be in jeopardy, could easily buy the company. After all, the Sherman Plant used to be a Texas Instruments wafer facility. This is not too outlandish, but we are of the opinion that WFR needs to be kept independent. cost sharing of the $100MM they need for expansion would be my guess as the most optimal way to handle the situation. Loer depreciation and a slightly lower cost might translate to higher profit margins. After all, after paying $100MM for equipment, the "cost sharers" coudl ill-afford to see WFR goe out of busniess<GGGG>. Best way to have your cake and eat it too.<GGGG> Just an opinion for an option that makes sense to me. Andrew