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Technology Stocks : Applied Materials No-Politics Thread (AMAT) -- Ignore unavailable to you. Want to Upgrade?

To: runes who wrote (6382)	7/4/2003 1:34:44 PM
From: Kirk ©	Respond to of 25522

Nice posts. A piece of trivia - Jim Bagley gave an interview back in '99 where he predicted that the semi boom-bust cycles were over because the investment community was no longer willing to support overbuilding capacity. WHOOPS! I think he also missed how countries like China and S. Korea find it is far cheaper to build and run fabs at a loss to gain future business plus it can tax its workers to regain much of the money lost than it is to field a large army and gain World dominance that way. Singapore went after out HP business by offering tax breaks. They recoup it by taxing their workers while enginers and fab operators in the US go on unemployment or get service sector jobs. It gets difficult for "for profit" organizations to compete with whole countries. Boeing is still doing well at it competing with several countries who formed an illegal monopoly if it was in the US, but it is not an easy job. Kirk

To: runes who wrote (6382)	7/4/2003 3:35:36 PM
From: Lizzie Tudor	Read Replies (1) \| Respond to of 25522

...Anectdotally - the PC component of the demand has been steadily declining since it's peak in '83 (advent of the IBM PC). And yet the '98 - '00 boom was the biggest one yet. That seems intuitively true. I have never seen any hard statistics on the breakdown of PC vs. non-PC fab utilization, but based on PDA, phone and TV (tivo and plasma smart-tvs) increase in electronic components, it seems like the pendulum has to be swinging the other way now. Especially TVs, those went from no electronics to mini-Pcs for the more advanced models.

To: runes who wrote (6382)	7/4/2003 4:47:51 PM
From: runes	Respond to of 25522

And now a caveat in support of Cary - As I said - I don't believe the underlying mechanism for the boom-bust cycle has changed BUT the actual cycle is 10 or 11 years and is punctuated by a number of subcycles. ...And in that regard, Cary is correct - the conditions that led to the last blow-off top won't be in play in the (hopefully) current recovery. This recovery will be tepid because 1) echoes of the collapse - people will be much more cautious initially 2) dormant capacity there is significant capacity that can be had without the full investment cost. This is also what happened going into the '90's. I can still see the graph that was put up at Lam (in '93?) showing the growth rates of semiconductors (average 15%/year) and fab capacity (averaged 10%/year since the late '80's - the last big bust). And that was 2 years into the recovery. ...And it set the stage for the 8" wafer fab boom in '94 - '96. Just as this next leg will most likely be tepid and set the stage for the next big ramp. PS - Have a happy and sane Fourth of July!

To: runes who wrote (6382)	7/4/2003 7:26:13 PM
From: Cary Salsberg	Read Replies (3) \| Respond to of 25522

RE: "...Fundamentaly, foundry vs captive fabs do not change the investiment/leadtime dynamic." You say, "I pointed out a very specific mechanism - the high cost of capacity expansion coupled with fluctuating demand and significant time lags between the need for capacity and when that capacity comes on line." The "cost" and "time lags" have been/are accurate, but unit demand has generally been increasing monotonically and unit capacity has been the fluctuating variable that effects price and leads to cycles. RE: "you seem to feel that because the semi market is no longer PC dominated and is driven by a wide variety of products, that the magnitude of the demand fluctuations (the forcing function to my mechanism) will be abated." I think the magnitude of the demand curve will get past the the unique boom/bust of the bubble and will return to even stronger growth rates. We differ on a couple of things, at least. First, the bubble of '98-'00 was not a typical semiconductor cycle. It was characterized by a very unusual spike up in demand unit volume. Second, supply, not demand, was the key to most semiconductor cycles in the past and will be in the future. I believe that the "the foundry/outsourcing model" and the "wide variety of products" don't change your "mechanism" (corrected), but do change the "dynamics", the way the mechanism is dealt with. Both tend to diminish fluctuation (boom/bust) by influencing the supply (capacity) dynamic to be more incremental.