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

To: Proud_Infidel who wrote (8452)	1/12/2004 6:50:04 PM
From: Jong Hyun Yoo	Read Replies (2) \| Respond to of 25522

Brian, I think equipment stocks will continue to perform well in 2004. This upturn may not end too quickly although I cannot say exactly when.. This is because: 1) chipmakers spending on capacity have been dismal during last three years. With an exception of a few companies such as Samsung and Chinese foundaries on 200 mm gears, everyone did not update the line. 2)Even if the chipmakers want to ramp up the line, the addition of capacity at a rapid rate may not be possible due to the production limitation by the equipment vendors. I am seeing some signs of this from my sources. 3) The production increase via further shrinkage of chip dimension is not likely to be the main force during this upturn. Although leading chipmakers are working on sub-100nm processing, the yield is not expected to be at an acceptable level for sometime. My feeling is that other than Intel and IBM, not many companies are out there with capability to produce 100 nm chips with acceptable yield by end of 2004. 100 nm processing will not occur till middle of 2005 by the most of the chipmakers and anything below that is even beyond that..It really gets increasingly difficult to shrink below 100 nm. 4) Only way to add the capacity is via 300 mm wafers. But I really have not heard very aggressive 300 mm green field start by chipmakers yet.. Chipmakers will upgrade the line first with more updated 300mm tools first. This will initially drive the revenue numbers up for equipment guys.. Depending on the magnitude of the upturn, chipmakers will start announcing new 300 mm fabs. I would expect this to be the second and more dramatic driver of the revenue, leading to another cyclical peak in the equipment business. 5) Due to huge expense associated with starting up new fabs, new fabs are likely to be joint venture of multiple companies. And we are likely to see many partnership with process technology in these new fabs.. Good luck to all the longs here..