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

To: Ian@SI who wrote (20030)	6/9/1998 1:07:00 AM
From: Jacob Snyder	Read Replies (1) \| Respond to of 70976

Ian: did you notice the date? eom

To: Ian@SI who wrote (20030)	6/9/1998 9:12:00 AM
From: Carl R.	Respond to of 70976

Ian, Whittington said it in Feb. 1996. And time has shown that he was correct. He predicted overcapacity for years to come, and after two years what do we have? Overcapacity that appears it will take another year or so to use up. Carl

To: Ian@SI who wrote (20030)	6/9/1998 12:55:00 PM
From: Big Bucks	Read Replies (3) \| Respond to of 70976

Ian, I think Rick is right on the money, overcapacity is a reality and any additional productivity improvements just makes the situation worse. IMO, this is no-win situation. Why spend hundreds of millions on new fabs/equipment if your chip profits are minimal and there may be a possibility that after you have spent the money to upgrade your fab(s) a newer technology paradigm is available which makes your recent purchases outdated? For example, a fab purchases equipment to take it to 0.25uM design rules and in 1 year the leading edge design rules are approaching 0.15uM which your newly purchased equipment isn't capable of doing. The fab then has to recoup the investment and depreciate the equipment with chips that have decreasing margin potential over the next X years just to break even on the investment. Where is the profit potential unless the fab has a niche product that isn't yet a commodity. It seems that all the high productivity/yield enhancements that are enabled by the wonderful equipment that AMAT and other vendors manufacture has made high use chips into commodity items with decreasing profit/margin potential. I have argued this point as have Dave Dhillon, Akidron, Teri, and others since summer of last year. There is manufacturing over capacity in the chip market and fabs are forced to compete with decreasing revenues and a decreasing market share or go out of business. This is a viscious cycle with no clear winner, IMO. Just my opinion, BB