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Technology Stocks : Semi-Equips - Buy when BLOOD is running in the streets! -- Ignore unavailable to you. Want to Upgrade?

To: Mason Barge who wrote (6929)	9/17/1998 4:54:00 PM
From: goldsnow	Respond to of 10921

>> Tell me this: do you think the chip industry is dead, or in a lull?>> Forgive me for ot remark, but a real question are we going into Recession and Bear Market and if we do. than for how long...Depending on your answer you should buy sell or hold and the reason is that we are not living in a usual time (lull time)

To: Mason Barge who wrote (6929)	9/17/1998 5:14:00 PM
From: Ian@SI	Read Replies (3) \| Respond to of 10921

Mason, Re: do you think the chip industry is dead, or in a lull? First, I think the question should be rephrased. It's probably just as accurate to lump all types of chips into "the chip industry" as it was to lump all software, hardware, firmware, equipment and processes required to produce same into "the high tech sector". At the very least, one should separate Memory from Processors. And even within those categories, there are various special niches with specific value added IP necessary to produce the chips. All that said, there's clearly more capacity than demand as we all know. Efficiencies and upgrades seem to be growing the yield faster than the increased demand. I believe this will come to an end, that capacity utilization will again go up. Or, said in other words, lower priced chips spur demand which will cause the growth rate to increase (in unit volume at least). There will always be "next generation" chips which will command a price premium. Current and trailing edge chips are priced like commodities to an ever increasing degree. The time that a chip seems to enjoy "next generation" status seems to be decreasing. With those thoughts, my answer is: Most parts of the chip industry are suffering from excess capacity (in a lull if you prefer). This is a self correcting situation. What do you think? Ian.

To: Mason Barge who wrote (6929)	9/17/1998 9:08:00 PM
From: David Rosenthal	Read Replies (2) \| Respond to of 10921

Mason, Tell me this: do you think the chip industry is dead, or in a lull? Of course not dead. However a case can be made that recovery is far off. Overcapacity is widespread as Ian has pointed out. We also know that some of the efficiencies being applied are increasing capacity in already saturated markets. Therefore, even with fab closures, I think that the supply part of the equation will not decrease significantly unless things remain bad enough to literally drive more players out of business. As far as demand it looks like it is weak in two of the major drivers telecom and computers (I know that computers were supposed to be suffering from an inventory correction that is over but someone is going to have to show me evidence of reviving demand in addition to Intel. So far the contract manufacturers are still hungry and this indicates to me that things are still sluggish). Since many parts of the world are in recession this cannot help demand. If things are unsettled in the US then businesses and families may hunker down and decide to do without new toys. So supply and demand may remain out of balance for a while. It may really take dead companies and not just bloody stock prices before things start to balance again. If six months from now visibility is still nil then todays prices may look pretty inflated. Of course for all I know things are picking up right now and it hasn't filtered into the news yet and that is why the more knowledgeable Street is purchasing. I would love to see more confirmation of business activity picking up. It would make it easier to call this a firm and final bottom. Dave