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

To: Lone Star who wrote (19448)	5/14/1998 11:32:00 AM
From: shane forbes	Respond to of 70976

This is from the c.call (thanks to J. Snyder): we have no idea when DRAM supply and demand are coming into balance, we just take it one quarter at a time. We have a hard time seeing orders beyond one quarter. DRAM prices have to firm before capital equipment orders pick up Could not agree more about non-DRAM non-commodity - that's been exactly my premise since mid-Feb and that is why I am holding/building certain semi positions. Shane (demand-capacity is the essence - never debated this either. However demand is only one side of the equation. Therefore claiming that unit demand is the driver is not good enough. That capacity needs to catch up (really slow down in our case) with the deamand. Until then ASPs suffer, revenues suffer for the DRAM companies, cap. exp. gets delayed and everyone is schrewed. I agree the increasing unit demand is the light at the end of the tunnel, but the length of that tunnel is also important and over-capacity dictates the length of the tunnel. Further why do people go on and on with this buy-or-die thing. This is a highly competitive industry. In any industry companies die! So some will die! There is no magic pot of gold where these DRAM companies can go and drink their fill anytime they want to. Do you see Citibank et al lining up to lend the Koreans money? Those guys are desperate. Desperation for them does not equate to success for AMAT if they can't raise the cash. A viable business is supported by retained earnings. You can only finance yourself for so long before disaster strikes. Then you have to pay the bankers. If you have no money to pay the bankers sorry but you are dead-meat. Call it Capitalism at its finest.)

To: Lone Star who wrote (19448)	5/14/1998 11:37:00 AM
From: Katherine Derbyshire	Respond to of 70976

>> So even DRAM players must buy new equipment for the next battle or go away-and, some are making that very decision. << But what are the DRAM companies going to buy all that new equipment with? No revenue means no credit, too. Re: 256 MB DRAMs, current pricing means those chips would only sell for about $40 each. I'm not sure you can make money on them at that price, given the cost of technology upgrades. Re: non-DRAM capacity, remember that a DRAM fab can make other kinds of chips, too, and the foundries are spending like mad. Katherine