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

To: Gottfried who wrote (44523)	3/25/2001 5:40:21 PM
From: Jacob Snyder	Read Replies (1) \| Respond to of 70976

re: "we shouldn't leave it up to consumers because of the long lead times to get a fab online" If all semi companies had balance sheets like Intel, then you'd be right. But few do. Most semi companies build fabs with borrowed money, or out of today's cash flow. Few semis have a big enough pile of cash, to maintain (during a downturn in chip demand) the capex plans they made during good times. We've seen this over and over, in every cycle. In the early stages of a downturn, the semis play a game of chicken with each other, trying to maintain capex, so they'll be in position for the next upturn. In the later stages of a downturn, they are forced to cut capex anyway, as their losses mount. As the early downturn evolves into the late downturn, semis go from thinking about tomorrow's upturn, to thinking about today's survival. Then, and only then, is the bottom of bookings reached. The above is my proposed cause-and-effect connection between consumer sentiment and semi-equip stock prices. I've just begun to consider this relationship, and I could easily be wrong.