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.

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

To: marc henschke who wrote (23243)	8/24/1998 3:37:00 PM
From: Katherine Derbyshire	Read Replies (1) \| Respond to of 70976

No, 1997 profitability came from lots of fab construction, as Taiwan staged an assault on the foundry market and Korea (pre-currency crash) declared itself determined to keep building in the face of DRAM over capacity. That's why 1997 was a "false" upturn in some ways--it wasn't justified by chip fundamentals. Katherine

To: marc henschke who wrote (23243)	8/24/1998 10:02:00 PM
From: Big Bucks	Read Replies (1) \| Respond to of 70976

Marc, You are partially correct, there were significant equipment purchases to enhance/upgrade fabs to 0.25uM process capability from greater than 0.35uM geometries. Those expensive purchases are far from fully depreciated and will need to be in production for 3-5 years to reach their full depreciation write off potential. This is one of the key reasons why they won't be replaced very quickly, plus the fact that the chip profit margin squeeze has diminished the return on investment and increased the time requirement to achieve full payoff. The push right now is to try to maximize device yields and enhance productivity capability with the current equipment set by "stretching" its usefulness into the into the next device generation by using innovative processing techniques, supported by newly developed processing technologies without having to completely start from scratch. 0.25uM technology is currently state of the art and many fabs are just moving into this area or have just made the move in the last 6 months, they won't be realizing the full payoff for several more years on this most recent investment. Fabs must show profitability to the shareholders or they won't have any. The cost and time involvement to show profit return is formidable and has become more difficult of late. Right now profitability and survival are the driving influences, growth/expansion will come later for most fabs, IMHO. BB