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

To: Ramsey Su who wrote (23646)	8/31/1998 8:53:00 AM
From: KLINVESTOR	Read Replies (1) \| Respond to of 70976

Ramsey, <<Supply of chips has been artificially curbed to somewhat match demand. I think the tone would be substantially different here if demand used up capacity and not a random level of production.>> I would and actually did say the opposite occurred during the first half of 1998 related to the supply of chips being artificially pumped up due to liquidation in both the inventory levels of pcs, the build to order model increasing, and a reduction in DRAM inventory levels. The same Montgomery Securities reports a week ago stated that lead time on DRAM purchases had increased from virtually zero to I believe 3-6 weeks. Whether that is true today I don't know but the underlying comments would lead one to believe that utilization rates were suppose to be up also. One other negative during the first half of the year is many people hold back on pc purchases prior to a new microsoft release like WIN98 even if it was no big deal and then begin upgrading pcs a couple a months after the new release because the bugs have been worked out. A contrarian indicator if anyone believes those, is six-twelve months ago this Board and others were just packed with Bulls and a negative comment about the semi-market would get pounced on. Today obviously the market prices for semi-equip makers has dropped substantially and any possible sign of a positive development is pounced on. I would venture to say all of the optimism of a year ago was unrealistic and all of the pessimism of today is unrealistic. Semi-capacity excesses would seem to be one area that works itself out very quickly versus other non-semi markets. Either through increased chip complexity or demand increases across the various sub-sectors. The next six -nine months will be interesting and I don't think anybody has a clear crystal ball as proved by the changing market perception over the past year for this sector. Good luck!