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Technology Stocks : Semi Equipment Analysis -- Ignore unavailable to you. Want to Upgrade?

To: BWAC who wrote (5709)	9/28/2002 8:10:14 PM
From: Donald Wennerstrom	Respond to of 95610

I think it is a lot more complicated to determine the expenditures on semi-equips than looking at the fab utilization rate(s). I readily admit I do not know how to evaluate all of the elements that go into making buy decisions of semi-equips, but one set of powerful drivers is the ever present push to make smaller, faster, cooler, more energy efficient chips, etc, for the "market place". There are at least 2 major reasons for this: 1. This tends to lower the cost of future consumer equipment to the end user, and 2. It enables making new products that were not possible with older technology. I expect there would be many more reasons than the 2 given above as well. I am not familiar enough with the specifics of semiconductor manufacturing to know the "obsolecense" rate, but it must be pretty high. I think a lot of the fabrication equipment presently theoretically available is not really available at all. Maybe it could still produce chips as required, but it could not do so in as cost effective manner as the fabs with newer equipment. Let me give you an extremely simple example by telling you about my cell phone. I had a Nokia 5190 phone for a couple of years. It worked well, but I recently upgraded to a Nokia 3395 a couple of months ago. Best think I ever did. The new phone is half the size and weight of the old phone. The battery is half the size of the one used in the old phone, but will run twice as long on a single charge(24 hours a day for over 4 days). The sound quality is twice as good as the old phone and at least equal to my house phone. The phone has no external antenna and fits very easily into my front pocket. Now as much as I like the new phone, I fully expect to buy a new phone in another 2 years that will double the performance with half the power requirements again. That is just the tip of the "iceberg" because the new phone to come could have many more features as well - at less cost than my present new phone. This is a long-winded reply, but to reiterate, I believe that fab utilization rates are important, but there are many other elements that go into making the decision to buy new semi-equipment for the factory. Don