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.

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

To: Katherine Derbyshire who wrote (6972)	9/20/1998 1:14:00 AM
From: Ian@SI	Read Replies (2) \| Respond to of 10921

Katherine, I'm not arguing that chip makers are rolling in profits today and certainly not the commodity DRAM makers where the Glut has been largest for over 2 years. Yes, they are suffering and will continue to suffer until: 1. Productivity improves 2. Volume increases (i.e. CapUtil'n goes up) 3. Deflation returns to trend. My point was simply that lower prices to the consumer will cause volume to increase faster than trend. This will suck up available capacity. ... which should result in some pricing power for the chipmakers. i.e. - they won't lose all future productivity gains to price decreases. With the recent spate of Fab closure announcements and the delays in building new capacity, the glut may disappear faster than is currently expected. I certainly don't intend to place any more money on this hypothesis before there's some concrete evidence that it might actually be happening. And finally, if consumers buy increasing numbers of microwaves and other products will even more chip content, than the makers of those products will buy more chips from chip companies eventually causing the chip companies to buy more equipment from equipment companies. I certainly didn't think that it was necessary to point out that connection to you. :-) (and I still don't think so.) Another fact that I'll grant you is that many Equipment companies are priced as if the world will enter an out and out depression that it may never recover from. e.g. ASYT, MTSN, SVGI, BRKS priced nearer to Net Cash than book. Ian.