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To: Czechsinthemail who wrote (11568)	12/15/1997 6:32:00 PM
From: James Connolly	Respond to of 25960

All, good article on Korean semiconductor equipment spending. "While the parent companies of all three of South Korea's largest electronics makers have announced deep reductions in their overall 1998 capital investment plans, none are yet willing to scale back spending for their semiconductor divisions, traditionally a strong source of revenue" techweb.com Regards JC.

To: Czechsinthemail who wrote (11568)	12/15/1997 10:05:00 PM
From: mauser96	Respond to of 25960

The speed at which DRAM makers move to smaller line sizes is a function of the balance between short term and long term profits. In the earliest stages of new technology, it is cheaper to stick with your old equipment and old methods. However, as the learning curve and volume of production increase with the new methodology, it gradually becomes more profitable. At some point the curves cross each other, and from then on the newer technology has progressively increasing profits. At some point, the old technology is producing products that cost more to make than they can be sold for. If a company reaches this inflection point with no way to get the newer technology in place, it will either have to quit the business entirely or be faced with geometrically increasing losses. Since I don't believe that Korean companies want to exit the semiconductor market, they may delay 0.25 production for a short time, but they don't have the luxury to wait long periods. The clock is ticking for everybody in the industry. BTW, there is an excellent article in Forbes 12/29/97 issue about East Asia collapse titled "It Ain't Over Yet" . The conclusion is that this is a solvency crises (similar to S&L debacle in the U.S.) rather than a currency crises. Much of the money borrowed by Korean companies was in dollars, Japanese yen and assorted European currencies, and the only way out for them is to reduce imports and increase exports. Since the South Korean won is down 40% against the dollar, it it means that a $1 million loan is now a much larger burden on the company. Much of these exports will have to valued in foreign currencies. The article doesn't say this, but I can think of few items valued in foreign currencies that they can export except electronic parts. They can cut back on things that are exported mainly to countries that they don't owe money to(smaller Asian countries, third world countries, etc) but not to Japan, USA and Europe. The main product these industrialised countries want is electronics and semiconductor products. Therefore the Koreans will continue to produce them. The Korean companies that produce DRAM are not companies like Micron, they are huge conglomerates (chaebol) that can allocate limited funds to whatever divisions needit the most. The DRAM business will take precedence over their other businesses. In some cases if they are forced to close a DRAM plant or two, it's likely that others in Japan or USA will take up the slack. If my reasoning is correct, this is a golden opportunity to buy semiconductor equipment stocks at bargain prices.

To: Czechsinthemail who wrote (11568)	12/16/1997 8:38:00 AM
From: Maxwell	Read Replies (1) \| Respond to of 25960

<<.... is there enough margin in the increased yield of 0.25 micron to support major investments in new equipment at this point?>> Everything depends on the yield of the .25um 256MB DRAM wafers. If the company can achieve similar yield as the 64MB DRAM then they have dropped the cost of manufacturing by 1/4. Then everything penny spent on the .25um stuff is justified. The company that is gutsy enough to mass produce the 256MB and successful will goble the DRAM market. This is an interesting time to gamble on it because the Koreans are contemplating about future expansions. Furthermore you got to be prepared for Windows 98! Maxwell

To: Czechsinthemail who wrote (11568)	12/16/1997 8:50:00 AM
From: Maxwell	Read Replies (1) \| Respond to of 25960

Baird Soule: Sorry I didn't answer your question. The answer is that initially the yield on the 256MB DRAM will be low. As the company produces more wafers they will resolve the problems involved (called the learning curve). Then at some point there will be a cross over to the 64MB in term of die yield. That is when mass production occurs. Shortly the yield should surpass the 64MB. Most companies now are just having a pilot line of making 256MB DRAM. They are not yet in mass production. Maxwell