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.

Technology Stocks : Semi-Equips - Buy when BLOOD is running in the streets! -- Ignore unavailable to you. Want to Upgrade?

To: Robert Douglas who wrote (10078)	1/24/2002 1:54:35 PM
From: Gottfried	Read Replies (1) \| Respond to of 10921

Robert, I'm not sure semi making will become less capital intensive. Aside from that the article shows bias. He says >In 2001, industrywide revenues fell a nightmarish* 38%*< when the drop came from an unusual bumper crop year that nobody should have expected to repeat, let alone be surpassed. Then he cites stock gains from the post-9/11 low [a common device among alarmists]. That drop in Sept was due to an external event and most stocks have not recovered to August values yet. Gottfried

To: Robert Douglas who wrote (10078)	1/24/2002 2:24:18 PM
From: Proud_Infidel	Respond to of 10921

I have my doubts too. The concept itself is counter-intuitive. The cost per wafer may decline over time(as it has), but the cost to build fabs will still be enormous, and the profit potential will also be tremendous as IC's permeate nearly every aspect of our lives. Brian siliconstrategies.com SBN Notebook: By 2025, fabs could cost $40 billion a pop! Executive panel debates how chip making will change in 23 years Semiconductor Business News (01/08/02 15:16 p.m. EST) PEBBLE BEACH, Calif. -- What will semiconductor production technology and wafer fabs look like in the year 2025? That was the brainstorming question tossed out at high-level executives with semiconductor equipment suppliers during the Industry Strategy Symposium (ISS) here. As might be expected, the responses were entertaining as well as chilling. And, ISS panel discussion on Monday left many of those attending the session wondering how many chip makers and fab equipment suppliers will be around in 23 years. Only the strong and rich will survive, according to the consensus from the panel discussion. For example, a single wafer fab could cost a staggering $40 billion by the 2025 timeframe, said Kenneth Levy, chairman of KLA-Tencor Corp. during the panel discussion. In another ominous predication, Levy said he believes that lithography tools could cost as much as $300 million per system, based on current technology trends. While the costs of wafer fabs and processing tools will continue to soar, the chips themselves will head in the opposite and historical direction, getting smaller, faster, and--of course--cheaper. The long-term question facing the chip industry is whether it will be possible to maintain historical growth rates as semiconductor plants become more expensive and affordable to fewer players. Extrapolating from current technology trends and accelerating industry roadmaps, Levy predicted that chip makers will be processing wafers with device geometries of only "10-to-20 angstroms" in 2025. After the panel discussion, Levy told SBN that "for memories, we could see a terabit-on-a-chip." There was another ominous predications during the ISS panel discussion: The IC industry may be maturing and will not grow at its current rate over the next 25 years. The semiconductor industry has grown 35% over the last 25 years, from about $6 billion in 1975 to $210 billion in 2000, according to semiconductor analysts. Based on a 35% growth calculation, the chip industry should reach $7 trillion in revenues by 2025. But is it possible that the chip industry will reach that level of worldwide sales in 23 years? It's highly unlikely, responded James W. Bagley, chairman and CEO of Lam Research Corp. in Fremount, Calif. "If the IC industry grows to $7 trillion by 2025, then the semiconductor business could be 25 times larger than the electronics industry," Bagley noted. "I don't think that will happen." It's also unclear just what will drive the overall IC industry during the next two decades. Will it be the PC? Or, communications? Biotechnology? Or even space exploration? Bagley said he believes that the semiconductor equipment business may be the last to know what will drive semiconductor growth in the long term. "We are the most narrowly-focused people on the face of the earth--next to the Taliban," he quipped. Most chip equipment executives agreed on one predication: It will be the survival of the fittest by 2025. Only the strong IC and equipment companies will survive due to the soaring costs to stay in business, said Brad Mattson, former chairman and CEO of Mattson Technology Inc. of Fremont, Calif. In fact, he suggested, the IC market will resemble the automotive industry with a wave of consolidation reducing the number of players. "I think the same thing will happen to us," said Mattson, during the panel discussion. "The technical problems in the semiconductor industry will not cause Moore's Law to fail," Mattson added. "The economic problems in the semiconductor industry will cause Moore's Law to fail."

To: Robert Douglas who wrote (10078)	1/24/2002 2:44:16 PM
From: Cary Salsberg	Read Replies (1) \| Respond to of 10921

We have a good opportunity to make money as long as the competition believes this kind of nonsense. 1. Large wafers make chip production more efficient and productive, not less capital intensive. In fact, the capital equipment that achieves improved efficiencies and productivity is worth more and chip makers, whose markets expand due to faster, smaller, cheaper, and less power consumption, are able and willing to pay more. In conclusion, the percent of sales devoted to capital equipment rises slowly while sales rise rapidly. 2. INTC capital equipment budgets have been extremely aggressive in the face of the economic and technology slowdowns. $5.5B on the heels of $7.3B doesn't take any heat off any competitors. Capital equipment is bought to meet company needs. Spending has never been monotonic. Capital spending cuts or increases by other chip producers is not influenced by INTC, but by market demand and their individual fab situations. The one company that is definitely and directly influenced by INTC, AMD, has announced plans to increase it capital equipment spending. 3. The new accounting rules have affected reporting for most of 2001. Companies have reported shipments in addition to revenues and bookings. Shipments have been less than revenues for most of 2001, so anyone paying attention knows that falling revenue will continue until sequential shipments start to rise and shipments exceed reported revenues. The top semi-equips (AMAT, ASML, KLAC, NVLS)have had a nice run from last year's lows and are not cheap relative to historical measures. On the other hand, there are very few companies in any industry that have such favorable competitive positions and future prospects.

To: Robert Douglas who wrote (10078)	1/25/2002 9:41:19 AM
From: Katherine Derbyshire	Read Replies (2) \| Respond to of 10921

Funny, the switches to 6" and 8" wafers didn't reduce capital spending. Why would 12" wafers have that kind of impact? The idea that 300-mm wafers will reduce capital spending isn't new. Improved capital efficiency is the only reason to go to the larger wafers in the first place. (As readers of this thread probably know, the claim that "the new 300 millimeter silicon wafers can reduce line widths to just 0.13 micron" is simply wrong.) And yes, if demand stays constant, the larger wafers allow chip makers to make the same number of chips for less money. But demand doesn't stay constant. Lower cost/function encourages new applications and increases the sales of existing applications. If that business model collapses, then everyone's in trouble, but that's not the argument Covello is making. The reference to Samsung's cutbacks is a red herring. The DRAM makers have been suffering with endemic overcapacity for years. If Covello actually followed the sector, he'd know that, and hail the cuts as long overdue. Similarly, the SAB101 issue will only surprise people who've had their heads in the sand (or somewhere equally dark) for the last year. Every industry conference call or earnings press release I've seen in the last year has discussed the impact of SAB101. Usually, claims that the semiconductor equipment industry is dead make a pretty good buy signal. Katherine