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Technology Stocks : Dupont Photomasks (DPMI) -- Ignore unavailable to you. Want to Upgrade?

To: DJ Clancey who wrote (182)	2/24/1998 12:26:00 AM
From: Duane L. Olson	Read Replies (1) \| Respond to of 955

DJ.. The Wiz has done a bit of work on Capacity issues for plants in the semiconductor industry... The "high fixed costs" come from just having a plant running. For a chip maker in a new Fab, for example, the cost of the first chip is horrendous..you are depreciating a couple hundred million dollar plant after all. Those high fixed costs get spread over more and more product as production moves up to a high percent of capacity ( 80 percent or more is nice). DPMI, supplying the masks, is subject to some of the same forces in that they have to maintain a production site (9 around the world) regardless of mask demand. Having the plant in place gives high fixed costs... putting out the product spreads those costs and gives better margin spreads.. Would that go some towards explaining?.. TSO