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

To: Timothy W Adams who wrote (3618)	7/10/1998 8:21:00 PM
From: Scotsman	Read Replies (1) \| Respond to of 4697

Good post. Now what does this mean. I take this to be very positive for the future of wafer prices. My reasoning is that this is typical of what happens when companies get caught in a glut. Their R&D gets cut while the scramble just to make ends meet with what they got. Capital spending goes to zero. Expansions, either planned or underway, get stopped. Basically progress and capacity get freezed. Now, this is good for now, but what happens when demand catches up? Now all that has happened is that demand, which may also temporarily be down, will start to move ahead, and usually it accelerates. By the time it meets supply its curve is very steep, meaning that demand soon outstipes supply bigtime. Suddenly those cuts in R%D and capacity look like a mistake, and these suppliers start to scramble to meet the demand. Now the really good part starts as it is suddenly realized that you just don't turn on extra capacity. Plant expansions take a long time to restart, not to mention get on line. So the easiest way to get extra capacity will be to make the wafers larger. Since MEMC has a good hold from what I have read on 300mm, this should bode well. Heck, it should do well whether it has 300mm or not as demand will explode at some point past supply unless there is very good management at the wheel and they start to add on capacity when it looks like they don't need it, ie now. Hence we have Zeevs J curve. OK, what do ya'll think.