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

To: Jacob Snyder who wrote (40038)	11/27/2000 9:33:36 PM
From: Alan Gallaspy	Respond to of 70976

Here are a couple of notes from some MSDW analyst, and they talk about cap-ex, expansion plans and capacity utilization. Some cutbacks in new equipment may be due to lack of easily available money for expansion, and in the case of MU vs Korean DRAM fabs, they make this seem like a good thing. Of course, take it all with a grain of salt as precious few of these 'cysts were telling us to sell back in March. Micron Technology (MU-$41-O) Reductions in DRAM Capex, Reiterate Outperform J. Cross We are seeing cutbacks in DRAM capital spending that are favorable for MU and the DRAM industry. Hyundai reduced C2001 capital spending from 2T to 1.6T won. In addition, we believe Samsung may also reduce its capital spending and slow the ramp of its 12-inch production plans. This follows DRAM spending reductions by second tier vendors such as Nanya and Mosel-Vitelic. 64Mb DRAM spot prices have rebounded from the $3 range to $3.60-$3.70 range. 128Mb DRAM prices have increased from $6.60 range to $7.50 or so. It appears that DRAM inventories have been worked down in the spot market. Yet based on inputs from Asia, we believe PC builds have peaked in Nov, and inventories are high at DRAM vendors. We reiterate our Outperform rating. We may get a short term trading rally in MU, but we believe that high DRAM inventory levels and slowing seasonal builds are likely to pressure the stock again. Based on the reductions in DRAM capital spending, we would be positioning on MU for better market conditions in the spring of C2001. Japan Semiconductors: Worldwide Semiconductor Equipment Sales Data Noriko Oki Worldwide Semiconductor Equipment sales rose 75.8% in Sept. Data released today by SEAJ (Semiconductor Equipment Association of Japan) and SEMI (Semiconductor Equipment and Material International) show that monthly sales for semiconductor manufacturing equipment worldwide in Sept were up 75.8% at US$5.1B, a Y/Y increase for the 15th consecutive month. However, growth decelerated from 88.2% in Aug. By region, sales for NJA, which includes Singapore, were up 113%, Taiwan up 112%, N. America up 93%, Europe up 64%, Korea up 50%, and Japan up 37%. Although sales growth looks healthy, we are concerned with the trend in bookings in the next 2-3 quarters. As sales caught up with bookings in the recent months, we expect the book/bill to come down near 1.00 in the near future. We expect 300mm-related equipment demand to sustain bookings towards year-end and beyond, but order growth for existing products should decelerate, making for more difficult Y/Y comparisons. Korea needs some special attention. Hyundai reduced capex for 2001 from W2.0T to W1.6T because of tight cash flow due to significant debt burden. This is negative news for the equipment industry although there will be benefits for the overall supply/demand situation for the DRAM market. We need to monitor developments in Korea with special attention.