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

To: Donald Wennerstrom who wrote (10438)	7/6/2003 9:50:46 AM
From: Kirk ©	Respond to of 95487

A good question for all of us that we need an answer for is what is going to make semi-equip spending increase, and most importantly, when? It will go up when they need to make more chips that require equipment they don't have. Lets do a thought experiment with "fake" numbers only there for scale. I have no idea if they fit any reality. Lets say you have a choice to buy a single 256Meg Flash USB Drive for $80 using a 0.1um process or you can get the same capacity at Frys by buying 8 seperate 25.6 Meg Drives for $6 each (25% cheaper). Would you hassle with carrying around 8 little drives where you have to remember what is stored on each? Or would you pay the 25% premium to have it all on one little drive you can carry around your neck on a string? Now would you pay a 50% premium? How about a 200% premium? Foundries will produce as long as the incremental wafer cost is less than the revenue generated. They become completely obsolete when nobody will buy the chips at any cost. For example, would you buy a P1-60MHz PC if you could get the processor for a penny? So... I think the canary to watch is the capacity and lead times for the advanced processes. It should have a snowball effect too as the more "new stuff" that comes on the market the larger the effect is to make the "old stuff" worthless. The evidence I am seeing is saying advanced processes are already at the "add capacity" stage of over 90%. When you see lead times go out, it usually means folks are waiting in line for a wafer start. Waiting in line means full capacity. I already saw this at Frys with the drives. You can buy 128Mb USB drives from many vendors for bout $60 and they had 64Mb drives on sale for $25. You pay a 20% premium to get a single drive. These are just fantastic things to have if you share files between PCs. BTW, here is a post where I talked about getting one of these drives. Message 19043745 That one is twice the memory as what I could buy at Frys for the same $60. I got some sort of closeout deal at Frys as they wanted about $100 to get that much memory the last time I was there a few days ago.

To: Donald Wennerstrom who wrote (10438)	7/6/2003 10:09:46 AM
From: Kirk ©	Read Replies (1) \| Respond to of 95487

Here is another question to ask and understand. I'll put my 2¢ out for others to tear apart or add to. Why is AMAT still seeing negative growth while LRCX is growing revenues? I own both. AMAT is a much larger and "older" company so it has much more "installed base." A significant percentage of AMATs revenue (compared to the smaller companies) comes from servicing and supplies for equipment already installed. If that equipment is going obsolete faster than the demand for new equipment, then it will see declining sales while a company like LRCX with much less service revenue will see growing revenue sooner. AMAT most likely has much, much more advanced process revenue than LRCX but it is canceled by declining revenue for stuff going obsolete. This will eventually change, but it is delayed vs LRCX. This is probably why the smaller companies lead the larger companies in the US for other sectors, not just the semicapx sector. I've been thinking and your charts confirm that the wise move for me might be to buy companies like LRCX and UTEK near the bottom as I did and then roll SOME of my profit taking dollars into the larger companies as the economy gains steam. This makes sense also since the "regular folks" are much more likely to buy stocks that advertise on TV like AMAT and DISNEY vs LRCX or UTEK. (those AMAT adds could pay off someday... man whomever made the decision to spend that money should be fired or retired!)