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

To: shane forbes who wrote (19551)	5/18/1998 11:53:00 PM
From: Gottfried	Respond to of 70976

shane, sorry to disappoint you; I only have the btb data. GM [eom]

To: shane forbes who wrote (19551)	5/19/1998 9:51:00 AM
From: Katherine Derbyshire	Read Replies (1) \| Respond to of 70976

>> Fair to say that it should be around 17% per annum - I am basing this on fact that chips growing at 17% ad infinitum must mean that semi-equips might do the same + or - a little bit (assumes semi-equip %ge of chip revenue has remained fairly stable)?<< Total capital spending (which is probably about 75% equipment and the rest buildings, land, etc.) has averaged about 21% of chip revenue since 1982. According to ICE, when spending is <21% of revenue, chip ASP goes up, and when spending is >21% of revenue, ASP is flat or goes down. In other words, 21% seems to be the number that gives a comfortable capacity balance. >> Now for the tough question: As the chips get more complex I would assume that the semi-equipment needed will be more and more expensive and thus conceivably the future average growth rate for the semi-equips will exceed the chip revenue growth rate. Hazarding a guess at say average at 20% for the next few years - intermediate rate - also suggest chip company profits just went down a few basis points!<< Not sure I buy that. The 21% number I quoted above has held through several technology transitions. That says to me that chipmakers raise their prices (or cut spending) rather than let capital spending eat into their margins. The exception would be if equipment companies are able to provide some new value-added that lets the chip companies reduce operating or development expenses, and there are signs that is happening. Katherine