Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Semi-Equips - Buy when BLOOD is running in the streets! -- Ignore unavailable to you. Want to Upgrade?

To: Mason Barge who wrote (6100)	6/30/1998 8:04:00 AM
From: Hayduke	Respond to of 10921

Oops! [EOM}

To: Mason Barge who wrote (6100)	6/30/1998 10:24:00 AM
From: Joe Dancy	Respond to of 10921

Mason - interesting article: latimes.com "ÿComputer chip and chip equipment producers have been hit particularly hard by the Asian financial crisis, analysts said. Sales of computer chips in Asia hit bottom in February, and equipment sales are expected to follow suit later this summer, said Mike Murphy, editor of the California Technology Stock Letter in Half Moon Bay. But Murphy said he expects both sectors to be growing again by the end of the year. " Joe

To: Mason Barge who wrote (6100)	6/30/1998 4:01:00 PM
From: Math Junkie	Read Replies (2) \| Respond to of 10921

re: "To the immediate point, a lot of Asian companies are going to be buying semiconductor equipment in the next year or so." Pardon me if this has already covered: I really want to believe this, but where are they going to get the money?

To: Mason Barge who wrote (6100)	6/30/1998 4:30:00 PM
From: Jacob Snyder	Read Replies (1) \| Respond to of 10921

MB: re: "a lot of Asian companies are going to be buying semiconductor equipment in the next year or so. " The asian companies have no cash and no credit. What are they going to buy semi-equip with? I notice you left yourself an out with that "or so". I think "or so" might mean the "in the next millenium". See below: DRAM upturn is 'inevitable' By Jonathan Joseph; NationsBanc Montgomery Securities June 29, 1998, TechWeb News The DRAM market is currently in its third year of decline, which is unprecedented. Never before has it declined even two years in a row. Shipments have fallen 42% this year, to $14.5 billion, from $25.1 billion at the peak in 1996, according to the Semiconductor Industry Association. In this period, however, annual bit demand has grown by about 90%. In most cycles, a recovery year is characterized by solid double-digit growth following the year of decline. If pricing remains firm, we believe the DRAM market could grow roughly 20% in 1999, while bit growth could exceed 80%. The DRAM market is ultimately a rational market, and we believe an upturn is inevitable. Over the past three years, the industry has burned about $25 billion in free cash-by far the greatest cash drain in the history of the business, and one that is not sustainable. Given that two-thirds of the industry has financial backers that are not liquid, capital-spending levels should see downward pressure for some time. In addition, prices have declined about 98% in the last two-and-a-half years, and the initial improvements in yields and die shrinks have not lowered costs enough to reduce the significant losses. Indeed, by one estimate, the industry will lose $9 billion on $14.5 billion in revenue. Meanwhile, pricing in the spot market has firmed over the past two weeks, and some configurations have actually risen from extremely depressed levels. Price speculation on 16-Mbit DRAMs and 64-Mbit devices at $1 and $6.80, respectively, has disappeared. Low-end quotes are now averaging $1.40 and $7.50, respectively. Looking at the DRAM industry's historical cash flow, we may not be able to predict a bottom, but we can say there is not enough liquidity in the system to sustain the current burn rate. Lower levels of capital spending are likely for some time. By our own estimate, from 1996 to 1998, the industry will burn about $24 billion in free cash, and it will likely continue to burn cash over the next two years. Two-thirds of the DRAM industry has bad credit and cannot raise any substantial amount of capital. We may have already seen the worst in per-bit price declines, which tend to be cyclical. It's not that DRAM prices are not declining, but that they're not declining quite as rapidly as before. Copyright r 1998 CMP Media Inc.