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

To: Ramsey Su who wrote (24568)	9/23/1998 6:12:00 PM
From: Clarksterh	Read Replies (1) \| Respond to of 70976

Ramsey - How many years at the pace of 12.5 fabs/yr would we have the mother of all gluts again? Hey, yet another way for us blind men to look at the elephant. But why is it that 12.5 fabs per year will ever lead to a glut? I have no doubt that yet another glut will occur, but maybe it will take 30 fabs a year? Just trying to look at the glass as half-full instead of half-empty. Clark PS A confounding factor is that fabs have limited life, even when upgraded. The best I can tell is that the equipment in a fab (including the facility itself) has a limited life of between 5 and 10 years. It is quite conceivable that there are only 125 fabs in the world, so 12.5 die per year and need to be replaced.

To: Ramsey Su who wrote (24568)	9/23/1998 8:51:00 PM
From: SKIP PAUL	Read Replies (1) \| Respond to of 70976

Ramsay do you know how many countries in the world do not have single fab. Most! Do you know how quickly fabs become obsolete (non competitive) about 3 years!

To: Ramsey Su who wrote (24568)	9/23/1998 9:39:00 PM
From: Katherine Derbyshire	Respond to of 70976

>>If an average fab is $2B, that means 25 fab per year. OK, not all orders go into a new fab, how about just half, or 12.5 new fabs per year. How many years at the pace of 12.5 fabs/yr would we have the mother of all gluts again?<< Only about 70-75% of a fab's cost is equipment. The rest is land, architects, cleanroom shell and facilities, and so on. But, since the total cost is climbing above $2 billion, $2b is probably a nice round number to play with. Unfortunately, you can't put a value on "number of fabs to make a glut" because you don't know enough. What are the fabs making? What is the demand for it? You could have a DRAM glut and a microprocessor or DSP shortage simultaneously, for instance. If it were easy to figure out, we wouldn't have gotten into this mess in the first place. If the PC is dead and nothing replaces it, 5 fabs a year could be too many. If NT 4.0 drives massive upgrades, and Iridium gives everyone on the face of the earth a satellite phone, and the third world suddenly decides to give every schoolchild an Internet hookup, 25 fabs a year could be too few. Problem is, we don't know where in between reality lies. Katherine