Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Proud_Infidel who wrote (49739)	7/24/2001 11:09:49 PM
From: Katherine Derbyshire	Respond to of 70976

Don't judge the entire industry by what Intel does. The economic advantages of 300 mm wafers are much clearer if you make huge volumes of large area chips (like microprocessors) than if you make relatively small volumes of smaller chips (DSPs, graphics processors, specialty communications chips). Remember that a 300 mm fab represents a huge financial cost ($3 billion or so) and a huge capacity increment. Not many people can make that kind of investment, and not many people need to. Looking at the foundries in particular, 30% utilization is barely enough to support fixed costs of the capacity they already have. WHERE are they going to get the money to build more? And why would they want to? Katherine

To: Proud_Infidel who wrote (49739)	7/24/2001 11:17:55 PM
From: robert b furman	Read Replies (1) \| Respond to of 70976

Hi Brian, I saw it several months ago,but I recall that there were 9 firms that had initiated 300 mm pilot lines. Note not production lines. Rick Hill's comment about last quarters orders noted that what changed from last quarter to this quarter was the shift from copper interconnect on 300 mm lines to 200mm lines. In a world of excess capacity this makes sense.If supply was short more capacity makes sense.Go ahead and build a new 3 billion dollar facility. But where demand is less then supply why not shut down the old line - upgrade it's capabilities - retain the same number of employees - tell them that temporary layoffs are required do to"down time". Car manufacturers do this all the time when inventory days supply are high - it a saving face way to say business sucks. Those who can build and implement 300mm lines are the leaders of the chip world. I've never read about it ,but I imagine those companies that can buy,depreciate and get up to production speed the best of efficient technology buys hit a sweet spot where old technology prices provide a cushion that increases margins and justifies the huge capital outlay. I think Intels 7.5 million capex proves the concept.The first to buy, is the first to have it fully depreciated - the first to benefit from it's manufacturing efficiencies - the first to afford the next state of the art manufacturing techniques. From what I know of it, they create the new process that provides the efficiency. They tell the equipment manufacturer that if they can build it on this timeline, we'll buy so many of them - if they meet the following specs.Then if it works ,our idea is the leading edge stuff and you are free to sell it to whoever wants to keep up. Those with the right ideas and the money to buy leading edge equipment as defined by their own specs, always stay out ahead. When times like now occur,and your new techniques really result in efficiencies,you drop the price and kill your competitors cash flow.It is brutal - you eliminate your competition by selling below where they can get. Once achieved,back off production or wait for the glut to reduce and then bring back sane pricing,with a bigger market share.This results in bigger profits and they accumulate much faster in the absence of your now defunct competitor. Then as James Morgan says - they all come at once.Heck prices are great,margins are good,competitors are gone and by gosh we need this yesterday. We poor shmuck investors wonder why we can't time this thing to where it makes sense.ggggg Chill out,buy low, hold long, sell early and try not to go crazy. See how easy it is. I'll be on the road for the next 2 days try to hold this market together would you please.<VBG> Bob