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

To: Ramsey Su who wrote (24556)	9/23/1998 11:15:00 AM
From: David Aegis	Respond to of 70976

Ramsey: Interesting questions you raise. Will unit volume chip demand outpace the increased productivity of the new machines (line shrinks, 300mm wafers) such that more machines will be needed than ever before, or will fewer machines be needed in the next up cycle? An added variable would be the average selling price per machine. Can the equipment co.'s sell them at higher prices to reflect the increased productivity, or will competition squeeze down the margins? The answers to these questions are, I'm afraid, anyone's guess. Which means uncertainty. And the market hates uncertainty, explaining at least some of the negative sentiment for the semi equipment group. --David

To: Ramsey Su who wrote (24556)	9/23/1998 12:53:00 PM
From: Katherine Derbyshire	Read Replies (4) \| Respond to of 70976

>>I am beginning to think that Semi eq and the semi industries are inversely related. When semi eq are hot, a chip glut will soon follow. This in turn will send the semi eq companies down as over supply runs its course. The larger the glut, the longer the cycle.<< Someone once described it to me as sort of like cracking a whip. The handle (the chip companies) moves just a little, but the end (suppliers to the equipment companies) moves a lot. The fundamental problem is that a fab is a huge expense, and it's hard to buy a fraction of one. So all the chip companies delay as long as they can, then splurge to satisfy their pent up demand. Meanwhile, unmet demand drives up prices, so people overbuild to try to capture some of those profits, creating a glut. The market research companies in the industry try to forecast all of the things you mentioned. They are notoriously inaccurate. In the current situation, the great unknown seems to be chip demand. Without a good estimate for that (impossible right now due to macroeconomic uncertainty), estimates of all the other things are just guesses. Katherine