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To: Clarksterh who wrote (4182)	12/29/1997 11:57:00 AM
From: Zeev Hed	Read Replies (2) \| Respond to of 10921

Clark, some companies are withdrawing from DRAM (Japan Steel?) and moving into foundry services for logic devices. That might keep the slight oversupply there for some time. There is also a possibility that some of the huige expansion underway now in Taiwan will end up as service foundries, and that will keep two segments under water for a little while. I think that the basic problem is still that we are currently at a peak in equipment delivery and the extremely high rate of equipment shipment of the last few years (relative to toal chip shipments) cannot be maintained, thus we will see few quarters of bad q over q comparisions in this segment. Zeev

To: Clarksterh who wrote (4182)	1/2/1998 9:32:00 AM
From: Jay M. Harris	Read Replies (3) \| Respond to of 10921

Clark, Intel's inventories increased smartly in their third quarter earnings report. Also, prices for micros are declining more rapidly than costs associated with the .25 micron ramp. Hence, Intel gross margin concerns. Currently, it is difficult to discern whether Intel is pricing aggresively because AMD has good product in the channel, or are they just trying to reduce inventory? We shall see in two weeks. Intel is more impotant than following the box makers GPMs because of Intel's extremely large market share within the industry. Intel truely reflects the condition of the industry at large being a single product company " in terms of revenue" with a 90% share of Micros. However, I strongly disagree with " '98 is likely to be substantially different from '95, although the uncertainty is likely to hurt capital equipment sales in the first part of the year. Clark, I personally believe that Capital spending will be crushed in the second half of 1998 and that equip share prices have only begun to discount this risk. Hence, we should get our shot to jump in at 1X revenue in the next 9 months. I think equipment fundamentals will hold up over the next 3 to 6 months and that the downturn for equips should be in 3rd or 4th quarter 1998. Also, I would not be surprised if memory prices firmed during a similar period of the equip downturn in fundamentals in the second half of '98. This would spell the opportunity of a lifetime for people to extract above average returns. Keep your powder dry, because memory prices lead equip fundamentals on both sides of the cycle. Jay