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

To: Ian@SI who wrote (13241)	12/14/1997 12:53:00 AM
From: davesd	Read Replies (1) \| Respond to of 70976

DRAM is 40% of the worldwide chip business and I think it's a much bigger part of the asian FABs. If you look at units of chips....DRAM, FLASH, SRAM is a much bigger business than CPU's. Therefore the DRAM business uses alot more semi-tools than the CPU manufactures. When you say..."big deal" about the drop in chip price....it is a big deal...if they aren't making money they cannot afford to expand....and anyone who thinks that all of a sudden FABs will be investing in bleeding edge technology to try to make a profit is just kidding themselves. I think most of them will try to milk the current tools by shrinking the die much like MU did. This is a classic cycle....in good times all the fabs add capacity so that they can get the biggest market share....the semitool companies have a field day....pretty soon they realize they have over built and chip supply exceeds demand and chip prices begin to tumble and Fabs cut back on new capacity investment until their cash flow improves. Until the manufacturing of commodity chips becomes profitable...the semitool industry will continue to suffer. The DRAM manufactures moved to 16M to try to make a profit...that didn't last long....now the move is to 64M and the prices have already come down to a level where there is very little profit....and soon 64M will be a non-profit business...We just went thru the busiest season for DRAM and the prices dropped over 50%, I wonder what will happen after the XMAS rush. dave