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Technology Stocks : Applied Micro Circuits Corp (AMCC) -- Ignore unavailable to you. Want to Upgrade?

To: Stoctrash who wrote (1496)	4/25/2001 10:15:52 AM
From: Rob S.	Read Replies (1) \| Respond to of 1805

This is a relatively good time to be a fabless chip supplier of specialty chips because you don't have as much fixed asset costs. Some good semi companies are now working at lowered capacity rates. That is part of the picture that drives down margins. Many products exhibit "elasticity of demand" to some degree. OEMs tell the chip suppliers "our target is to cost reduce xyz product by 25% and we need your company to do your part. If you want to be a good supplier to xyz company you will work with us to grow market share and attract new business." There are lots of reasons for margins to go down in this kind of environment and it boils down to the need to increase end product demand. Without customers buying more end products everyone suffers.