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

To: niek who wrote (19056)	5/23/2006 12:33:05 PM
From: Gottfried	Respond to of 25522

what party? >>Start thinking about "end of the party" for chip industry<< Or does potato chips and kool-aid constitute a party?

To: niek who wrote (19056)	5/23/2006 1:32:09 PM
From: etchmeister	Read Replies (1) \| Respond to of 25522

"We're now starting to see an accumulation of indicators that in previous cycles lead to an overheated situation and were followed by steep corrections," said Rosa Luis, director of marketing and sales for Advanced Forecasting. Such indicators include capacity constraints causing shortages, lengthening lead times, companies placing customers on allocation (as TSMC reportedly has begun doing), major capacity investment announcements, and increasing orders for semiconductor manufacturing equipment. Compared to 2000 and prior the chip market seems to be controlled by far less players that put strong emphasis on profitability; I remember the big boom up in Pacific NorthWest: National built a state of the art fab in Puyallup (WA); IDT built fab, Fujitsu built fab in OR, Zilog built fab in Nampa, HP did major expansions in Eugene (OR)and so did Hynix fab, LSI Logic in Gresham, AME in Pocatello (ID). These were all pretty potent 8 inch fabs but with exception of Hynix none represents a major capex player as of today. In case all those players were overshooting capex the consequences would be far more severe. The outsourcing trend puts pretty much all capacity expansion in control of the (two) foundries and I don't see TSMC nor UMC go "pedal to the metal" - IMHO they rather turn business away rather than overextending capex. Doublebooking is always a problem Just a couple years ago the predictions were that emerging foundries from mainland China would "trash" the foundry market - today the gap TSMC enjoys is even wider though CHRT seems to do well (but it's small). Besides increasing technology barrier 300 mm fabs put pressure on 200mm fabs Increasing technology barrier is taking its toll and certain chipmakers move into niche markets. Another chip maker quits the DRAM business Dan Nystedt Chip makers aren't showing DRAM much respect these days. Yet another one announced plans Thursday to stop producing DRAM and seek profit elsewhere. Taiwan's Mosel Vitelic Inc. said it plans to develop solar cells and RFID (radio frequency identification) technology going forward, after years of producing DRAM. Over the past several years, stiff competition among makers of DRAM chips (dynamic RAM), which are mainly used in PCs to hold data as it's being used, has caused companies to sell their products at a loss. While the low prices can benefit users by helping keep PC prices down, it also stifles innovation by forcing companies to spend less on research. In fact, new DRAM chips are now developed through industry standards groups, while chip makers have focused their energies on finding other, more profitable chips to produce. Mosel Vitelic is following its former partner Infineon Technologies AG out of the cutthroat DRAM business. The two had a joint venture DRAM factory in Taiwan. Infineon spun out its DRAM operations into a separate company, Qimonda AG, earlier this year. Other DRAM makers have also sought to shield themselves from the wild price swings in the DRAM market by producing other kinds of chips, such as the flash memory used to store music in digital music players, or image sensor chips for digital cameras. The culprit for the industry change has been the volatility of DRAM prices. Factors including swings in PC demand can affect prices, sending them from profitable to unprofitable in days. Over the last several years, the situation for DRAM manufacturers was exacerbated by the fact that they have often been forced to sell the chips at a loss due to overproduction: There are simply too many competitors in the industry. In the aftermath of the Internet bubble, DRAM industry revenue plunged by two-thirds in 2001, causing producers to bleed losses. They've been reworking their business plans ever since. Now, however, prices for the chips have started to stabilize at profitable levels. Most industry researchers, including iSuppli Corp. and DRAMeXchange Technology Inc., expect tight chip supplies from April through June to lift prices to highly profitable levels. Part of the tightness in supplies is due to a transition to using a more advanced DRAM chip, DDR2 (double data rate, second generation), which recently overtook DDR as the memory chip of choice for PCs. But the main change for pricing is due to the industry consolidation and product shifts that started years ago.