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To: Proud_Infidel who wrote (14809)	7/14/1998 11:53:00 AM
From: Andrew Vance	Read Replies (2) \| Respond to of 17305

AV--REAL HOT FLASH-- There is an EMERGENCY meeting going on with the members of Sematech International regarding the 300mm initiative. Sematech International are the non US IC industry counterparts to the Austin, TX based Sematech Consortium. This is a very hush hush meeting that may yield a gut wrenching announcement that the 300mm initiative will not be supported by the equipment industry until 2005. The leader of this "rebellion" might even turn out to be AMAT. First of all, let's just consider this a rumor. The facts behind this rumor are quite obvious. 1. It has been well documented that the move to 300mm would require almost a completely new equipment platform. Previous equipment platform generations were able to handle a few wafer sizes by just adding the appropriate diameter indexers, trays, etc. In the past, we have seen the same platform handle 3"-5", 4"-6", and 6"-8" wafers with slight modifications. However, the move to 8" caused some of the platforms to be re-engineered. The move to 12"(300mm) will require, possibly a whole new evolutionary type of platform. SVGI recently reported it 300mm Vertical Furnace preparedness. Well, Vertical furnances was an 8"(200mm) re-engineered platform. 2. The cost of the 300mm Initiative was going be be astronomical in terms of R&D expeditures to develop the equipment set. Never before in the equipment sector has such massive amount of money was required. this was going to severely impact the bottom line of almost all the equipment suppliers. 3. Many equipment suppliers might not have the resources to effectively meet the financial challenges of delveloping this next generation of tools thereby requiring them to either go out of business or form partnerships (alliances or mergers) with other companies. 4. Only the biggest and strongest of the suppliers will be able to meet the challenges required for this initiative. The drain on their resources will stretch them to close to a breaking point. There might be a defocus on existing platforms in order properly fund or man the new programs. Existing equipment improvement programs may suffer as resources are used to develop the new architecture processes. None of this should come as a surprise to any of us since we discussed these things last year. HOWEVER, couple this with an genral industry downturn and you have a massive problem. What you are about to witness is an attempt by the equipment suppliers to return to their core 6" and 8" businesses and to improve their bottom lines for survival. This may turn out to be a blessing in disguise. Unburdened by the high R&D costs associated with 300mm programs, you should see some positive action to company financials. Refocusing on core businesses by way of process or equipment enhancements will provide welcome revenues and profits as optimized equipment is manufactured in existing facilities thereby reducing the need for cpacity expansions at this point in time. The equipment sector will be given a needed breather to regroup and refocus on what made them successful in the past. I may not have stated my case well but I am in a rush right now. I wanted to make everyone aware that there is a "storm brewing" and my gut feeling (with a little help from some contacts) what that storm is about to bring. The market probably will not react well to this type of news but it will provide some real good bargains if they tank on the supposed announcement. What I am hoping for, though, is a positive response, in the form of a nice rally. My rationale are the historical positive price actions by those comapnies that announce layoffs, closures, and other cost saving announcements that SHOULD be perceived as negative. I do not know why the market reacts the way it does sometimes but we do know it is inefficient.<GGG> Andrew