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

To: Fred Levine who wrote (8732)	2/4/2004 11:52:24 AM
From: Ian@SI	Read Replies (2) \| Respond to of 25522

Fred, In this case, Capacity is whatever definition the company gives it. Picture the fab manager that believes he needs more equipment. Most of the products will require him to get Board approval prior to committing to a purchase. Rather than explaining to the board why it's necessary to purchase another $300M+ line each and every time demand exceeds usable capacity, most if not all chipmakers would develop a capacity planning model, get that approved by the board, then go back to them when the model indicates that the fab will run out of capacity. The model removes all causes of equipment not being productively used - whether its PM, scheduled down time, expected failure/repair time or any other contributors to non productive time in the fab. If the model is close to reality and optimized, the fab cannot run at more than 100% for an extended period of time. But for a couple weeks to a couple months, most fab managers could squeeze a little extra out without seriously jeopardizing yield. And no model is that good that anyone would call 101% being truly above real capacity. Anything over 100% but less than 110% would probably be regarded as "time to upgrade unless this is a blip". FWIW, Ian