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

To: rhering who wrote (7730)	10/24/2003 1:59:20 PM
From: Big Bucks	Read Replies (1) \| Respond to of 25522

Roger, China's main advantage at this point is lower labor costs, although their environmental laws are probably a close second. Even given this, I would expect the cost structure of a automated 300MM FAB to crush any competing 200MM output in any high volume product mix. I disagree with this premise...if you consider what it would cost to purchase state of the art equipment, the robotics, the parts, the high cost supplies like ultra-clean gases, the learning curve, fab operating expenses, etc., the return on initial investment is much better with a lower technology fab. I suspect that they can build a very viable 8" fab production model with very large fabs, for about $1.5B and recoup the initial cost in 3 to 4 years....vs. building a state of the art 12" fab for $3+B and taking 6 -8 years to recoup the initial cost. After the initial investment is paid for, the fab becomes a money printing machine with very high profit margins.... I think we are talking baby steps here.... there is a learning curve and end market economic dynamics to consider. You can't race a Farrari if you don't know how to drive a Volkswagon beetle. There is price competition to consider...IMO.. Comments? Thanks! BB