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

To: rhering who wrote (7685)	10/22/2003 10:31:05 PM
From: C_Johnson	Read Replies (2) \| Respond to of 25522

Hi, A comment on this thought because I am doing some work in this area: The tools have a useful life of 3-5 years and then need to be technologically replaced or significantly upgraded. I don't see this trend changing in the next 7-10 years. Upgrade is the key word in your statement. Significant? It depends. Handling systems, software, definitely. Process? I think you'd be surprised at how well older process technology works in today's fab. In the big picture it depends on what your fab is manufacturing. Second, there have been several studies, one done by SEMI, that have looked at the useful life of semiconductor capital equipment and the residual values. The data suggests that even after 7 years equipment can, on average, be worth as much as 30 percent of original selling price. I know several major insurance players that are actually talking about taking a stance on this issue. I also know that the used equipment market is hotter than a firecracker right now. Tools in the used market are generally 3 to 5 years old. There are many uses for older equipment and those using this equipment effectively have been exerting a huge impact on the business. I was sitting next to an Intel Etch Department head in a Hitachi presentation booth last year at Semicon West. We were watching a virtual demonstration when he looked at me and said, "I have a bunch of those tools in my fab and they are over 8 years old." The feature size these tools were they were working with, sub 0.18 micron. There's no way to throw a blanket over the tool business so I would stress caution to anyone who believes that "tools have a useful life of 3-5 years". That's not necessarily true. Some tools have a short lifespan. Some maintain higher value than others. But looking back, almost everyone in the industry learned in '96-97 that wholesale equipment changes are not required to make a technology node transition. I understand that when you move to larger wafers and copper you must use new technology but there are very few players ramping capacity with the latest and greatest at this time. I suspect this is having an impact on KLA. $0.02 for the jar, Carl

To: rhering who wrote (7685)	10/23/2003 8:37:13 AM
From: robert b furman	Respond to of 25522

Well said !!! I think the killer ap days are over. The breadth of new products:pda's, wireless features and its equipment,flat panel displays ,laptops,desktops,cell phone with picture capabilities ALL incrementally add up to no real outstanding product - just a nice general higher utilization of chips. To lose a position in the beginning of a recovery is goofy. I'm hoping for some volatility to play some scalps with.It appears I'll get it. My account will take a hit - but in 04 I'll be smiling. My short term plays have never been productive - but in the long run these plays are very profitable. The result of a mega trend. Keep in mind many of these new chips require the new machines capabilities,this will provide growth to the cycles recovery. Bob