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

To: Katherine Derbyshire who wrote (24454)	9/20/1998 1:03:00 PM
From: Big Bucks	Read Replies (1) \| Respond to of 70976

Katherine, Re:For the long term, yes, we can expect demand and supply to match and the win-win scenario of more powerful chips for less money and fat margins to return. That's why I'm long term bullish on the industry. The question at this point is when the short term demand shortage will work itself out techweb.com Fat margins on more powerful chips are decreasing very quickly as competition heats up. At some point the end consumer has "designed in" features on the chips that he won't even need or use but that are available, none-the-less. An example is a VCR with multi-language, on screen programming and numerous features that 95% of consumers don't need or use. Shoot, the clock on my VCR is still flashing 12:00 because I don't need it or use it, I'm not even sure I know how to change it without referring to the manual!! 8^) More features built into a chip/product makes it more "universally" marketable, at a cheaper price, but inevitably it also eliminates the need for additional discrete supporting chips thereby decreasing the need to manufacture these now "outdated" chips. In effect, this further compresses the chip manufacturers into the same market segments all vying/competing against one another for market share, to the benefit of the consumer, but at the cost of decreasing margins due to competition. This ripples back to the semi-equip manufactures as decreasing production requirements which means less equipment is required in order to produce more/superior chips. At some point the consumer market/industry will reach a point of diminishing returns, whereby it just isn't profitable to compete to produce commodity chips due to the initial/sustaining costs of chip production. IMO, "system on a chip" will be the norm, but will be a cheap commodity with "universal" features suitable for 90% of the consumer markets'/end product requirements built in. Just my opinion, BB