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: Katherine Derbyshire who wrote (24437)	9/19/1998 11:27:00 PM
From: Ian@SI	Read Replies (1) \| Respond to of 70976

Katherine, At first blush, I'd agree with your statement re Ultracheap personal computers being a disincentive to build fabs. On second thought, it would appear that other factors might have more of a bearing on whether or not fabs will be built. 1. Productivity improvements 2. Unit growth 3. Current Capacity utilization for the chip type being considered for a new fab. The marketplace is far from saturated. While I don't know how much elasticity will result from lowered Selling prices, I suspect that it is substantial. The glut has caused prices to drop much more rapidly than trend. Is there any reason to believe that this won't lead to above trend growth in UNITs even as $ Sales continue to decline or hold their own.? As long as productivity continues to increase and once the Capacity surplus is consumed, the incentives to build fabs are likely to be as good as they ever were (if they ever were any good). JMHO, Ian.

To: Katherine Derbyshire who wrote (24437)	9/19/1998 11:58:00 PM
From: Clarksterh	Read Replies (1) \| Respond to of 70976

Katherine - Ultracheap personal computers deliver lower margins to the chip companies, therefore they have less money to build fabs with. It depends on the reason that the computers are ultra cheap. If it is because there is excess capacity and the attendent cut-throat competition, then I agree. But if it is because consumers do not any longer need the extra power, then the price of computers can follow Moore's Law down without any loss in margins (assuming that the number of units sold increases substantially as the price drops). Right now I suspect that the drop in computer prices is a result of a combination of the two causes. Clark