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

To: Sam Citron who wrote (9985)	5/22/2004 11:00:58 PM
From: Cary Salsberg	Read Replies (2) \| Respond to of 25522

Semis always had incentive to keep supply consistent with rising demand. I suspect that the recent long lean period and increases in capital costs make the incentive greater than in the past. Equally important, changes in the characteristics of the industry make it easier to adhere to the disciplined approach. There are fewer players in each semi segment. It is more difficult to bring yield to desirable levels at each new node of the roadmap. There are more significant semi segments to assign capacity to. Increased fab costs have led to joint efforts to build new fabs and greater dependence on foundries. Semis will eradicate the cycle by adding capacity in a cautious manner. I assigned 50% probability to that outcome. Semis will prolong this semi cycle by adding capacity in a cautious manner for a while, but then will overcome incentive and facility and return to excess. I assigned 50% to this outcome. Neither depends on demand. I assume that unit demand will continue to rise monotonically. An exogenous event, like the bubble and aftermath, could cause a temporary and possibly severe dip in demand which would cause a cyclical down leg despite any prudent efforts by industry players.