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

To: Big Bucks who wrote (20041)	6/9/1998 12:59:00 PM
From: Debt Free	Read Replies (1) \| Respond to of 70976

You mentioned Dave Dhillon in your post. Where has he been lately?

To: Big Bucks who wrote (20041)	6/9/1998 1:57:00 PM
From: Rob-Chemist	Read Replies (1) \| Respond to of 70976

I agree with you that there is production overcapacity in most sectors of chip manufacturing. In some areas, it may not disappear for at least a year or two (DRAMs come to mind) due to both finer geometries and design shrinks. In ASICs and processors, particularly high end devices, the "over-capacity" is much less severe and will likely disappear much more rapidly. The rapid development of new chip designs and processes (Cu, more metalization, new device structures, etc.) will also, I believe, eliminate the present overcapacity in this area relatively rapidly. (Interestingly, from the latest SIA estimates for 1998, DRAMs have dropped to being only approximately 15% of the total chip market in terms of $.) The greatest bottleneck presently in chip manufacturing is probably at the very beginning of the process, namely chip design: not enough engineers and relatively slow design software. Thus, the winners of the "viscous cycle" that you describe in your post will be those that come out with the best new designs (for an integrated chip manufacturer) and those that have the best manufacturing technology (for a foundry service).

To: Big Bucks who wrote (20041)	6/9/1998 3:58:00 PM
From: Ian@SI	Respond to of 70976

BB, When I asked the questions, I hadn't noted that the Whittington quote was more than 2 1/2 years old. Nevertheless, I tend to agree with most of the content of your response. I think the option that chipmakers have is ante up and stay in the game, or fold their cards and leave the table. And some seem to be doing that - MOT, for one and TXN rumoured to be selling its DRAM business to MU; etc. So even though the prospect of profits from upgrading is far from bright, the prospect from "not upgrading" is even worse. FWIW, Ian.