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To: Nancy who wrote (5396)	1/27/2005 11:16:03 PM
From: Gottfried	Respond to of 5482

Nancy, I don't have a good explanation. Backend equipment costs less and can be added quickly if chip volume rises due to demand. Frontend equipment costs much more and takes longer to set up and qualify for production, so it tends to react more slowly to chip demand. Gottfried

To: Nancy who wrote (5396)	1/27/2005 11:52:30 PM
From: etchmeister	Respond to of 5482

I think usually one starts buying a chunck of frontend capacity; as it ramps one adds accordingly to the (frontend) output testers and bonders. It wouldn't make sense to buy testers upfront - they are added as output increases and I believe backend capacity can be added in relatively small increments. The leadtime is relatively short which means they can turn the knob up or down fairly quickly. Since backend capacity is in synch with frontend output it's a fairly sensitive indicator whether output grows or slows. Another indicator would be wafer starts. Imagine having a connection to wafer producers that supply the top chipmakers. just my 2 cents