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Technology Stocks : MEMC INT'L. (WFR -NYSE) The Sleeping Giant? -- Ignore unavailable to you. Want to Upgrade?

To: Zeev Hed who wrote (3396)	5/31/1998 7:24:00 PM
From: Scotsman	Read Replies (2) \| Respond to of 4697

Carl and Zeev, good discussion. Looks like I am going to keep buying. The sweet spots you talk about are what keep me from selling options against my stock. I don't want to sell calls only to hit a spike to 16 and get it called away. Zeev, what do you think of Carls AMAT discussion?

To: Zeev Hed who wrote (3396)	6/1/1998 7:24:00 AM
From: Carl R.	Read Replies (1) \| Respond to of 4697

Zeev, regarding your points, I agree that I have not accounted for the exact extent of the overcapacity. This is because I do not know how much excess capacity there is out there. I know that as capital spending decreases there should be some absorption of capacity as fab utilization rates improve, but I really don't know how long it will take to equalize supply and demand. Do you have any estimates of how much excess supply there is, and how long it will take to absorb it? Regarding your second point, however, if you re-read my post you will find that I only refer to a steady increase in demand for transistors, not to chips, raw silicon, nor end sale of semi in dollars, none of which will necessarily increase in any given year. I am well aware that the total number of chips could decrease as more functions or more ram is placed on the same chip. As you cite, a 64MB RAM chip could replace multiple smaller chips for some applications. Similarly a PC-on-a-chip could eliminate driver chips, SRAM chips, BIOS chips, cache controller chips, and VGA chips. I have no way of forecasting what will happen to the total chip count, or even to the amount of wafers needed in any given year. My point was that if the semis decrease spending of capital equipment, then presumably the rate at which they are able to reduce feature size will be decreased, and that will cause them to use more wafer real estate than they otherwise would have. I am also aware that shifts in demand to epi or 300mm could create spot shortages that will improve margins, but these kind of shifts would typically require new capital investment by the semis, and presumably would tend to make the surplus situation in the 200mm wafers worse. Due to reductions in spending I would expect the shift to these newer products to be slower than expected. If this is the engine that will drive their future profits, then logic would dictate that their recovery will come after the equipment sector, not before it. Thus this is an important distinction. If the engine to improved profits is increased demand for 200mm due to higher fab utilization rates caused by postponing capital purchases, WFR should recover before the semi equipment companies, but if the engine to improved profits is new products, then the recovery should be after the semi-equipment group. So which is it? Or is it both? Thanks, Carl

To: Zeev Hed who wrote (3396)	6/1/1998 7:49:00 AM
From: Carl R.	Respond to of 4697

More thoughts on the business cycle for semis: I note that once overcapacity in the semi industry is created it typically takes three years to work its way out, and we thus have a 6 months to a year to go. My guess is that the typical cycle is that initially many start cutting back on purchases, causing a drop in sales. Then some of the stronger companies elect to try to get a generation ahead of the competition and resume their purchases, leading to a temporary boost in sales of equipment, but then the situation gets worse again as the weaker members have to resort to price cuts, and the stronger ones, now ahead, slow down their purchases again to await the collapse of the weaker ones. This cycle seems to be what happened in DRAM, for example. Equipment purchases slowed, and DRAM prices stabilized for a time, and it was better for the DRAM makers, but not good enough. Thus equipment purchases accelerated again, leading to further price cutting, and now we await a separation between the winners and losers. Once the losers give up, then equipment purchases will accelerate to a sustainable level once again. Who will the losers be? Korea? MU? The Japanese? Tiawan? Hard to say. Years ago the Americans were the ones to give up, but later got back in, and considering that MU does nothing else, I don't expect them to get out unless MU goes broke. The Japanese were stubborn about staying in the memory business, and I think they will be again. My guess is that the Koreans will be the losers because they do not have the money to buy the equipment to keep up, and the weakness of the Korean currency makes equipment purchases even more expensive. Even though they benefit from the weak currency in terms of production costs, in the long term the cost savings from shrinks dramatically outweighs labor savings, and they will be doomed without current equipment. As for MU, they are weak, but I think they will survive. Carl

To: Zeev Hed who wrote (3396)	6/2/1998 3:18:00 PM
From: Jim Goodman	Read Replies (1) \| Respond to of 4697

I have appreciated all you scentient posts, but I recently had to cut a quick, small loss, in WFR, and CS, which I gave out, recently, when they brokedown from similar "PSYCLE sm" patterns....can't win 'em all....I must "preserve and protect", unemotionally, as per my concepts...best wishes to y'all from here, and when/if some of these depr. techs est. better chart patterns, will certainly return here ....this has always been a good thread, information-wise....take care,