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

To: Sam Citron who wrote (7452)	10/8/2003 1:10:13 PM
From: Kirk ©	Read Replies (1) \| Respond to of 25522

As the chip industry migrates to China, a relatively low-wage country, it would not be surprising to see some labor substituted for capital, to the extent that is feasible in the fab. Less costly automation is how I'd interpret this. Do you think lower yields would result? With single wafer processing, I can see why you can afford to pay a person to move one wafer at a time from machine to machine rather than pay Brooks $1M for a robot. If the person drops a wafer.... you only lose a wafer, not a batch of 12 or 24. What you say is clearly evident in consumer electronics. Back in the 1990's I thought every PCB would be fully automated. I was shown recently at a top SOX company that their products go into household products that are built with hand insertion of leaded components with a single side solder bath! They push much of the electronics up into a few big chips then basically hand assemble them with the cheapest technologies in China. All the Value Added is in the chips made by companies Cary likes. Only where space is at a premium do folks pay for the costly multi layer, robot loaded PCBs. It was a real eye-opener! Kirk

To: Sam Citron who wrote (7452)	10/8/2003 1:47:50 PM
From: Cary Salsberg	Read Replies (1) \| Respond to of 25522

RE: "...why would it matter..." 1. I don't believe there is any way that capital intensity falls relative to labor intensity as the chip industry moves along the Moore's Law roadmap. 2. The analyst suggested that there was a secular trend toward lower capital intensity. I gave him the benefit of the doubt and guessed that he was talking about cap ex vs. revenue. 3. If he was talking about cap ex vs. revenue, then the rate of revenue growth becomes the key variable and intensity doesn't tell much. 4. I then thought cap ex vs. profit was a more valuable measure.