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

To: KLINVESTOR who wrote (23642)	8/31/1998 4:33:00 AM
From: Skeeter Bug	Respond to of 70976

>>Still my point is that if prices have been rising that is a sign that the supply/demand balance must becoming closer.<< kli, on this, we disagree - maybe on verbage, maybe not. the end user supply and demand is better. this matters SHORT term. of course, pricing has moved up. however, multibillion dollar fabs have to sit there and do nothing AND those fabs have to create inventory that goes into warehouses. this is why this uptick is completely phony long term. btw, it is an incredibly weak uptick at that. all that inventory being held back in order to bring demand ever so slightly ahead of CURRENTLY AVAILABLE supply will have to be unleashed at some point. when it does pricing and profitability will be absolutely cremated once again. total supply/demand is still way out of whack and that matters LONG TERM. this is a short term delay of the inevitable. a game of no limit poker. the irony is that the ONLY way to significantly reduce cost (everybody's dream) is to DRASTICALLY INCREASE OUTPUT and, thereby kill pricing. otherwise one's cost per unit is outrageous and ya gots to give up the ghost - something everyone wants everyone else to do ;-). if you have all fabs run at full capacity, account for 64 mb crossover and production efficiencies (read - increased output) then supply is absolutely overwhelming demand and pricing would for 16 mb would easily fall below $1 and 64 mb into the $4 or lower range. given the mu's of the world are nearly out of cash after 4 boon years of fantasy profits ought to indicate that there are problems. korea has problems - as does EVERYONE. however, samsung, toshiba, huyndai, etc all have other businesses to soften the blow somewhat and mu does not. the fact is that major players must EXIT THE BUSINESS PERMANENTLY before things REALLY CHANGE for the LONG HAUL. as for amat being higher earlier - hey irrationality is just that - irrational. makes no sense. jmntbho.