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

To: Cary Salsberg who wrote (7627)	10/20/2003 9:04:08 AM
From: robert b furman	Respond to of 25522

HI Cary, I sure tend to like your scenario. As mergers and acquisitions eliminate the SCE players,it is safe to say that the barriers of entry become larger. Couple this with the increasing cost of each new technology generation,and one could see a moderation of new players. If the existing survivors kept away from them all insanely chasing after market share vs profitability driving prices,we might see a very nice hugely profitable sector for a protracted time. This assumes greed of more product at firm margins wouldn't overide the investment thought process. Past performance indicates this era of Pollyanna Profits - will alas never occur. One can only hope that as the entire market matures resonable capital asset allocation keeps up witht the learning curve. Bob

To: Cary Salsberg who wrote (7627)	10/20/2003 11:23:36 AM
From: rhering	Respond to of 25522

Cary, I agree with you, that the time between peaks will lengthen, as the technology learning curve becomes more complex. The first one to the finish line will however reap enormous financial rewards. Additionally, the increased concentration of chip manufacturing over the last few years should reduce the amount of over-building that occurs during the upcycles. This should help to dampen the peaks & valleys, which is a good thing, particularly for non-traders. On a per unit basis however semi-equipment has never been so cheap. The best example is Intel's margins, maybe 60% for the current quarter. They spent a ton of money over the last few years moving to 300MM and now they are reaping the benefits. It sure looks like the 30% cost reduction in moving to 300MM is real. The economies of scale for chip manufacturing have increased substantially so there are fewer & larger players. However, the technology challenges poised by 300MM & .13 micron have been resolved to the point where the capability is more or less a commodity. To the point where, if you are an out of capacity chip manufacturer, you will loose the sale. The timing of the peak on the (chip sales) ramp will be driven by end demand and not by availability. It looks like chip manufacturers have been playing a very conservative game trying to delay their capacity buys till the last minute. The net effect of this will likely be a very steep capacity ramp in the next 2 to 6 months even if their forecasts are accurate. If they continue to get upside surprises ( .ie Intel did not expect their Q3 results) it will only steepen the ramp. Regards, Roger