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To: Ian@SI who wrote (6969)	9/19/1998 11:50:00 PM
From: Clarksterh	Read Replies (1) \| Respond to of 10921

Katherine, Ian, David et al - I guess the disagreement that we all have over the exact definition of deflation is just one more flaw in the simplistic argument of 'deflation of chips means bad investment during recession'. As for the exact definition of deflation/inflation, we're unlikely to resolve here it given that even the professional economists argue over the definition (hence the debate over CPI indexing for Social Security et al). Clark PS Katherine, no need to remind me of the chip ASP. When you first listed it it surprised me so much I'm unlikely to forget it. <g>

To: Ian@SI who wrote (6969)	9/20/1998 12:52:00 AM
From: Katherine Derbyshire	Read Replies (2) \| Respond to of 10921

Ian, I think you're missing my point. Equipment companies sell to chip companies, not end users. Chip companies sell chips, not microwaves. If the price per chip goes down faster than the cost per chip, which it has, chip companies make smaller profits. Smaller profits mean less money to spend on fabs, no matter what the unit demand. For what it's worth, DRAM unit volumes soared in 1996. If unit volume demand translated to capital spending, we would be experiencing a boom right now. Katherine