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

To: Sam Citron who wrote (58935)	1/16/2002 2:25:40 PM
From: Sam Citron	Read Replies (1) \| Respond to of 70976

SS 500 AMAT 42.10 (avg). Think we must test 40 before long.<eom>

To: Sam Citron who wrote (58935)	1/16/2002 3:40:06 PM
From: runes	Read Replies (2) \| Respond to of 70976

<<But this is the first time that a wafer size conversion has coincided with a synchronous global recession.>> That depends on how you define your global recession. So far I haven't heard anyone declare a global recession this time around although everyone agrees that we are on the brink. And the last wafer size conversion went down in the early '90's on the heels of the Gulf War "global shock". This time we have had the Ossama "global shock" which , hopefully, will dissipate just as fast. Semantics aside, yes, this economic downturn is more severe - a combination of rising oil prices, a burst bubble, and the Ossama "shock". But the 8" conversion was preceded by a semi downturn caused by a slowing US economy coupled with the Gulf War "shock". And the 6" conversion cycle started after the early '80's oil "shock". (Funny how oil always seems to be a factor!). But the basic semiconductor cycle remains intact. Over capacity created by a boom in new fab construction. Economic downturn kills profitability forcing old fabs to be shuttered and emphasis to be placed on new technologies. As conditions improve, new technology capacity starts to be added by retrofitting with shrinks and some size conversion. This goes through a few cycles until all the existing capacity is upgraded at which point chip prices start rising and the real profits start rolling in. At this point new fab construction kicks in with a two year lead time, financed by those nice juicy profits. At some point during this ramp-up, the economy dips, and all those fabs nearing completion keep coming on line. (Notice that semi equips were still posting nice profits even though prices and demand was still falling?). ...And so the cycle repeats itself. It's amazing how fab leadtimes can bolix things up so badly in an industry that has had solid underlying growth for the last 20 years (or more). So back to the point of discussion - yes, this is a more sever downturn and that is reflected by both the depth and duration of the industry's bottoming process. And yes, there is substantial risk that the recovery can falter and go even deeper. Which is why I will stay well away from margin until I am sure that the recovery is real. Even my 80% in February is situational. If I get there and everything still looks dicey, I will not go in as deep. But so far, everything seems to be falling in place. The Ossama "shock" looks to be comparable to the Gulf War "shock". There is the possibility of terrorist aftershocks but I am quite comfortable betting that these will be nowhere near the magnitude of 9-11 and that we will bounce back very quickly. My biggest concern at this point is that we may shoot ourselves in the foot with our zeal for security. Both from the politicians who keep people on edge (because it keeps them in the limelight) coupled with the ongoing need to spend, spend, spend to make us more secure (because it shows that they are doing something). Each of these drags on the economy in its way. (I better stop here, I'm starting to feel the need for a soapbox)