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

To: Teri Skogerboe who wrote (15055)	1/26/1998 4:04:00 PM
From: Clarksterh	Read Replies (3) \| Respond to of 70976

Teri - My contention is that last year was actually pretty bad for the semi-equip makers and that it won't take much for them to do at least as well. In '97 there was still excess capacity from '96 (somewhat speculative on my part, but not much) in DRAM's and to a lesser degree in logic. And, no one had to upgrade their manufacturing equipment since they had purchased the equipment in late '95 or early '96. It wasn't yet obsolete. However, at this point many companies are having to upgrade, and some companies are even having to add capacity (eg logic foundries). Thus, although there is still oversupply in commodity areas, and the end market isn't likely to grow as much as we might have thought 6 months ago, there are still compelling reasons to believe that the semi-equip companies will make earnings at least comparable (sp?) to '97. And in late '98 and '99 I would expect that all of the hold-offs will finally take a real toll on capacity, and their will be a relative explosion of new plants etc.. Thus, in a nutshell, to say that this year we are only going to be getting orders for upgrades is still a positive when compared to last year. Clark PS I do expect a temporary (6 months?) decrease in capital spending everywhere until this Asian thing settles out. Nobody likes spending their savings when they aren't sure whether or not they might need them to ride out a recession. PPS There are things that would significantly change my views, but so far they don't seem plausible to me. First, if it can be shown that there is excess capacity in the logic area, then I would worry more. But, to date no one has any numbers that would lead me to believe this scenario. Second, if Japan or China follow Korea, then all bets are off. However, this is becoming less likely with each passing day.