To: Thomas G. Busillo who wrote (670 ) 1/15/1998 11:18:00 PM From: D.J.Smyth Read Replies (2) | Respond to
I spoke with a CFO of another well known major semiconductor firm who supplies to Gary's "front end" today. although i'm not at liberty to say which firm prior to January's end, i asked this individual about the positive comments that Teradyne's Neuman had made about Teradyne's prospects for 1998. his comment to me was that he also thought Teradyne would do well this year as it was "industry standard" that next generation testing equipment becomes "more necessary" when, as is the case now, dram prices are falling. Testing equipment is, he said, "an inexpensive way to help increase the yield and thereby increase profits in a profit constrained environment." He interated that demand for next generation testing equipment, as Teradyne's, actually INCREASES in demand as profits decline relative to pricing pressures. This makes perfect sense actually. A company needs to squeeze every dollar it can out of current operations and if inexpensive next generation testing equipment is a key to that squeeze, they'll but it. When prices for chips are relatively high and everyone is comfortable, companies are less likely to move as quickly to achieve higher profitability. (this individual was not as enthusiastic about his own firm's immediate prospects relative to potential push-outs.)
