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.

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

To: Big Bucks who wrote (10174)	10/31/1997 8:29:00 PM
From: Tech Buyer	Read Replies (1) \| Respond to of 70976

>>"NO ONE WANTS TO BE KNOWN AS THE COMPANY THAT BUILT THE LAST 200mm FAB"<< BB and others, I wonder if this is partially rhetorical media sound bite. Does anyone remember or care who were the last companies to build 150mm and 100mm fabs? And did these previous wafer-size transitions actually caused a significant industry slowdown? It seems likely that both types of fabs will be built at the same time in different parts of the world, for a short while anyway. For example, Siemens could have the first 300mm fab running while other 200mm fabs in Asia are still being completed. Other big chip makers would then feel some pressure to keep up. Any historical perspective from long-time experts would be appreciated. TB

To: Big Bucks who wrote (10174)	10/31/1997 8:59:00 PM
From: akidron	Read Replies (4) \| Respond to of 70976

i'm not a big fan of predictions. there have been a few this week i've read that seemed incredibly confident considering the variety of factors affecting the market and they were by and large proven wrong. i will say however that people who bought amat at any price this week probably got themselves a short term bargin and a long term steal. the stock is 40% lower than when I sold it, having held on a year, and has corrected three times as heavily as the average for large cap stock and twice as heavily as large cap tech stocks. of course amat has exposed to all manner of potential ills, but it is hard to see how all of them together justify the stock's relative decline. also the stock still has in front of it an event that will cause a re-evaluation of the tech sector as a whole. the nov. 20th earning report. I have opinioned before that I can see no reason, given earnings already posted by NVLS, KLAC and others that AMAT - a company that is probably growing its market share at the expense of all its major competitors - shouldn't report "blow out earnings." i would not be surprised if they beat the most optimistic "street" estimates by 15%. the conference call is a more dicey matter. i would assume that the turmoil in asia will be a 'cause of concern, as will dram pricing. however i doubt either is significant enough to seriously effect the overall bullishness of the long term view. I have read elegant and impassioned views of the current state of play regarding both of these issues and have come to the following conclusion for myself. the bears and the sceptics (big bucks, dave dihllion etc) are of course correct dram prices are falling, and the increase in interest rates in asia will cause Fabs re-evaluate the cost of capital, and might in some circumstances delay capital spending... however in this new world order Fabs are now top of every developing nations strategic wish list... and new and bigger and better Fabs are being built in Europe, Eastern Europe, South America, India, Israel, Asia, and South Africa - in fact anywhere that there is an educated, low-wage workforce, and low enviromental controls. These Fabs are being built by companies and govenments committed to remaining on the cutting edge of technology, because uses for an out of date Fab are hard to find. So i guess what i'm saying is that this demand is increasing and pretty inelastic... You see most new Fabs are built with govenment subsidy, and most companies will chose to get the subsidies offered by the current administration and build now, rather that wait to see if they are still available under another regime... Of course there could be quite devestating long term problems if this non-market driven construction continues... a parrallel might be seen in the late 70's global steel industry... but that is a problem perhaps in 2005, certainly not now. As for dram price pressure, i have come to the conclusion that this is in fact a bull argument. Prices are falling, not because there is a shortage of demand for memory, but because there is so much demand for memory that economies of scale enable lower prices. we have here in fact perhaps the purest example of Greenspan's new economics. supply and demand find equilibrium at lower prices because production is so efficiant and free of monopoly that fabs can only maximize profit by maintaining or increasing market share. which of course explains why fabs are presently running close to capacity, yet cannot stabilize prices. MU really illustrates the bull argument well. it is in trouble because it has an aging product line that it has to discount, not because there would not be demand at a higher price point if it had a more current product. what is it going to do, keep producing chips nobody wants or leapfrog the competition by producing a chip for which there will be a demand, and that it can sell at a profit. obviously to accomplish this it will have to buy capital equipment... AMAT is a formost maker of a great deal of this equipment. I write this piece to tell anybody that is interested that I have decided that at these levels I am bullish, and will add to my position next week... While I refuse to make predictions of next week because I have no idea what external factors will prey on the market, I think its a good bet that the stock will be significantly higher on November 21st than it is today. I think that november 37.5 calls represent great value because on confermation of the story the stock will move imediatley because the fear surrounding it will evaoprate, and this is therefore my chosen method to play the stock and the forthcomming events. I hope this is useful whichever place relative to the fence you sit.

To: Big Bucks who wrote (10174)	11/1/1997 12:16:00 AM
From: Stefan	Read Replies (1) \| Respond to of 70976

Are you suggesting that there will be no FABs build in the near future just because "No one wants to be last to build the 200mm line" and the 300mm is not ready? If there is a CEO at any of the semi. co. that things this way he should retire, unless he is trying to sell 300mm equipment. At this point 300mm will be driven by DRAM manufacturers who need to lower their cost per chip to make any profit. As you may remember Intel originally did not see need for 300mm line for next two generations of their CPUs. Well, they got "paranoid" when AMD and Cyrix turn on the heat with new offerings. Now to keep their competitive advantage they have to invest in new technologis to increas speed of chips (lower RC and smaller features) and lower the cost (larger wafer, smaller features,incresed yeald). In the future largest % of productivity improvments will have to come from better processes and improved equipment since there are phisical limits to the size of the wafer and line with. Companies who are not in commodity business will build 200mm lines even when 300mm will be available. <JMHO> If you want to have fun, go in to the FAB.