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

To: Ian@SI who wrote (24438)	9/20/1998 12:59:00 AM
From: Katherine Derbyshire	Respond to of 70976

>> 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.? << Yes. That's exactly what happened in DRAMs, and in fact some of the DRAM vendors consciously set out to create and exploit that situation. They were so successful that they've nearly bankrupted themselves. >>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). << Yes. I don't want to spend too much effort defending Fleckenstein because I think he's wrong for the long term. But for the short term, productivity increases have only served to extend the capacity surplus, even as macroeconomic factors continue to damp down demand. Katherine