Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Jacob Snyder who wrote (23459)	9/10/2008 4:45:07 PM
From: Return to Sender	Read Replies (1) \| Respond to of 25522

Obviously I am not Gottfried but I believe most of the answer lies in the fact that while the numbers of chips going into endless applications continues to rise many previously not believed to be commodity related chips are now so cheap to manufacture with such thin profit margins that very few companies are building new fabs (ordering lots of new equipment) to match rising chip sales. Cyclical factors cannot be ignored as well. JMHO, RtS

To: Jacob Snyder who wrote (23459)	9/10/2008 5:27:46 PM
From: The Ox	1 Recommendation Respond to of 25522

If I might add to what RtS posted, there are more companies (who used to own fabs) that job out the manufacturing to the likes of the TSMs of the world. TSM, INTC, Samsung and others have changed the playing field for this sector. Its almost impossible for the "little guy" to compete by building their own fabs, due to the escalating costs associated with semi manufacturing on the "bleeding edge". A little guy might get the jump on the industry by creating a "better mouse trap" but as soon as the need is identified, the big boys come along and build similar or replacement chips at much lower costs. jmo TO

To: Jacob Snyder who wrote (23459)	9/10/2008 5:32:56 PM
From: Gottfried	1 Recommendation Read Replies (1) \| Respond to of 25522

Jacob, my guess is that semi equipment is more cost efficient than it was and that chip companies outsource when that is the cheaper way to go. Sanders' "real men have fabs" no longer applies.

To: Jacob Snyder who wrote (23459)	9/20/2008 5:13:14 PM
From: Cary Salsberg	2 Recommendations Respond to of 25522

1. Semi equipment is less expensive and more productive. This reflects seller competition in a market dominated by fewer and fewer customers and customers who are far more cost conscious. 2. Customers buy equipment in smaller increments and attempt to match increased capacity to increased demand. If successful, prices are maintained, which raises revenue, while equipment costs are minimized. The old patterns of equipment acquisition maximized equipment purchases which always lead to overcapacity, falling prices, and muted revenue growth. 3. Moore's Law leads to an expectation of increased capital intensity at each node. The fact that this is not reflected in equipment revenues is definitely a red flag. While it is unlikely that equipment revenue will increase as a percent of semi revenue, hopefully equipment revenue will start to increase in absolute terms.