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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 (3429)	6/6/1998 10:48:00 PM
From: Carl R.	Respond to of 4697

Of course I understood that the foundry was the one getting $1400 for the wafer, but I also realize that for each wafer out, one must go in. I also agree that the stock price today is a fairly accurate indicator of where the company will be in 6 months. My particular concern about the article was that the foundries had excess capacity at .25 and .35u. This means to me several things. One is that sales of equipment to achieve smaller feature sizes could take a year or more to recover because existing capacity will need to be filled before additional equipment is ordered. But for WFR it adds another element of problem. As a semi company that is using the foundry needs more chips, they could run more wafers, or do a shrink and run the same number of wafers with smaller feature sizes. With falling prices for the .35u process it makes it more likely that the customer (semi company) will elect the shrink route instead of running more wafers. Thus this would slow the time to absorb the existing wafer capacity to a year or more. Obviously the stock is telling us that recovery won't be in the next 6 months, so I guess we just have to wait and see. So now we have over-capacity in DRAM, over-capacity in flash, over-capacity in CPUs, over-capacity in foundry, and even over-capacity in smaller geometries. It could get ugly for the semi-equipment groups. The only places that could be safe would be back end (but TER, ATRM, COHU, and KLIC are all getting pummeled with the rest, so they may be in trouble, too), mask-making (ETEC, too, has been pummeled), or in equipment for .18u or below. Good luck, Carl

To: Zeev Hed who wrote (3429)	6/7/1998 2:47:00 AM
From: Carl R.	Read Replies (1) \| Respond to of 4697

Here are estimates from last March according to Dataquest for worldwide wafer consumption sorted by size: best.com According to this chart (from a presentation by David Perloff of Veeco on the future of metrology), 200mm wafer starts will rise from 31.1 million in 1997 to 40.9m in 1998 (up 32%), and then to 52.8m in 1999 (up another 29%), followed by 63.7m in 2000, up another 21% and double last year. Note that 150mm wafer starts are nearly flat from 1995 to 1999, and wafers below 150mm after declining rapidly from 1995 to today are essentially flat as well. 300mm wafers are really not a factor until 2002. Presumably the oversupply is in 200mm wafers. If demand is even remotely close to this, they should certainly be in shortage situations again by 2000. This was done at a time when semi demand for 1998 was projected to be up 6-10%, and considering that a decline is now forecast the wafer consumption projection is probably 5-10% high, but still up sharply from last year. Carl