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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: davesd who wrote (9566)	10/25/1997 8:17:00 PM
From: Big Bucks	Respond to of 70976

Dave, Bravo!!! Logical and to the point. The idea of a chip fab is to make as much money on your production as you can. Producing just to break even or lose money does not compute. Fab owners and investors are looking to maximize return within 2-3 years from startup and continue to improve revenues over the long term without continuously having to upgrade. This is one of the strengths of AMAT equipment, it is designed to accomodate at least 2 generations of devices which makes it viable for production for 3-5 years on newest leading edge technology. Some of their equipment has remained in production in excess of 10 years due to its' robust design to accomodate new process technologies. This means that some of the "newer" equipment will be able to meet the technology needs of 0.25uM devices for years to come, reducing the need to buy the newest equipment available until it is cost effective to do so. BB

To: davesd who wrote (9566)	10/25/1997 9:14:00 PM
From: Stu Bishop	Read Replies (1) \| Respond to of 70976

Dave, 1. INTC decided to reprioritize their spending. They are postponing completion of one fab because they decided to concentrate on another fab in Israel first. Not a cut back, just a shifting of spending from one fab to another. 2. Companies buy new equipment not just to increase capacity. New equipment is required everytime semiconductors evolve enough to render existing tooling obsolete. That is, new generations of chips, new designs, require more sophisticated manufacturing equipment. 3. Your entire bearish argument takes hypothetical to the most extreme limits. This could happen, then this would happen, then it gets worse and worse ... so the stocks will fall further. Give me a break! Yes demand must increase (catch up) to support the huge gains of the past year (or past six months). Hence, expect share prices to increase at a slower rate going forward. Nevertheless, this is a once-or-twice a year buying opportunity like July 96 and April 97. By buying during these times, you double your profits. I can't guarantee we've seen the bottom of this free fall. But the shares have fallen enough to suit me. In two more years, I have every confidence that I'll have at least doubled my money from Friday's purchase at $31.63. Sorry I have to take the opposing argument. Keep the negative comments coming. It's at least a reality check for the more optimistic of us. By the way, I've only become sooooo enthusiastic as a result of the recent 35% drop. Before, I was an owner, but I didn't expect much action to the upside for the next year. Now I do. Later. Stu B.

To: davesd who wrote (9566)	10/26/1997 2:08:00 AM
From: orson sanderson	Read Replies (1) \| Respond to of 70976

Overcapacity is the reality now but the name of the game is "staying in the game " of chip production. Cannot afford to be static, or get left behind. There must be price war as it is part of the game. There will be casualty on companies or countries not being able to afford the "capital intensive" investment game. The survivor of any downturn will become market share leader and cost price leader thereby reaping profit. It is an expensive game but very profitable when it hit pay dirt as in 1994.Regards

To: davesd who wrote (9566)	10/26/1997 12:48:00 PM
From: Alan Siegal	Respond to of 70976

Dave: << There are more chips out there than people really need >>. That's probably true, but it doesn't account for new software. All of us long termers have to be a little futuristic here, and we all have to consider certain facts. 1) We have been hearing about language processing software for over ten years now. It's my own opinion that such technology is probably 50-75 years in the future, and that to begin on anything but it's most rudimentary aspects at this time is like Babbages's attempt to make a computer with cogs, wheels and connecting rods. A big PC has 32meg of memory. How much does a person have? 32 GIG? 320? And they fit in a head no larger than a laptop--and that includes stereo scanners, stereo sound receivers, a speaker, thermostat and olfaction device! To get an inorganic instrument that sophisticated in such a small space will require chips as cheap and plentiful as sand. Don't think it isn't gonna happen, and regardless of where they're made, these chips will have to be made by machines, and the startup cost of those machine-making firms is already unattainable by any new entrant. 2) In case language emulation is just too far out, let's take it a bit closer to home. I don't know if there's any generally available commercial security system that recognizes family members by their faces (including with a band-aid on the nose) and voice-print (even with laryngitis). But I'll betcha the technology is there, just unfeasable today owing to the high cost of DRAM. As soon we get to some market-determined number, you can be sure such systems wil be de rigeur. I don't think this scenario is way kooky, do you? Ditto for HDTV. Ditto for last-mile fiber optic switches. Ditto for everything medical. I'm not an imaginative guy, so I can't fathom what uses folks will drum up when DRAM costs less than drinking water, (which isn't getting cheaper in my neighborhood.)--but I sure know that they'll be utterly profligate in their use of the stuff. (I ran my business for over a year on cp/m using 64k memory.) So all we have to do is choose a few good companies--some large, some small--and buy them whenever we have some money. Who'll know about this week's bump when my grandson goes to sell 1000 shares of AMAT 40 years from now? Just MHO, natch. -Alan (I think the average investment in these industries will beat the S&P 500 handily over the next few decades. I ask for little more.)