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

To: advocatedevil who wrote (45969)	4/27/2001 9:38:31 PM
From: Katherine Derbyshire	Respond to of 70976

>>I think it's worth noting that capacity continues to grow given that much of what is still being purchased is 300mm. << You're forgetting lead time. Equipment purchased this year has so far had zero impact on manufacturing capacity. I've said this before, but it bears repeating: The cyclical nature of the equipment industry is largely because the lag time required to build a fab is longer than the horizon for accurate chip sales forecasts. As a result, chip makers have two choices: (1) build fabs early and risk overcapacity in order to make sure that leading edge capacity is ready when needed; or (2) build late and risk missing a market window because the capacity isn't there. In general, mistake (2) is worse for the company and more likely to get the decision maker fired. And so, in general, chip makers always add more capacity than they "should," sooner than they should. Loose credit (0% in Japan, remember) further reduces the risks associated with choice (1). Katherine

To: advocatedevil who wrote (45969)	4/27/2001 9:54:17 PM
From: Ian@SI	Respond to of 70976

AD, It's not clear to me that there was either: 1. a massive chip-making capacity increase; or, 2. a significant chip demand slowdown I agree that the Telcom chip sector underwent a massive increase. It's not obvious that the rest of the chip sector is incurring an equivalent increase. Nor is it obvious that there is any slowdown in end user chip demand, especially given the continued growth in GDP. Rather there's an ongoing burn off of excess inventory in the Telcom sector which had double ordering going on for an extended period. Finally, most 300mm orders have been for Technology evaluations and process development rather than adding to production chip capacity. Surely your short argument has a more solid underpinning than what you put in this post. Have a good week end, Ian.