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Technology Stocks : LSI Corporation -- Ignore unavailable to you. Want to Upgrade?

To: Jock Hutchinson who wrote (15392)	10/2/1998 11:51:00 PM
From: shane forbes	Respond to of 25814

Jock: Yup plus he/she called Inprise BORL + not sure if I would call the DVB Hitachi win a cable STB win. (I prefer to think of that as a plain old TV win.) Just wanted to point out that LSI is actually seen as a leader by someone else and I am not the only idiot who thinks highly of Mr. LSI. Plus, here's both the ugliness and beauty of the chip industry: semibiznews.com The massive size of the cuts made in this year's semiconductor capital spending during the first half had stunned veteran managers and analysts. As much as $20 billion in wafer-fab investments were deferred or eliminated. But since July, the picture has gotten even worse. [shane's add: as verified by the semi-equip BTB] In fact, the budget slashing has accelerated to a point where people are now beginning to worry about severe shortages in chip-making capacity developing around the turn of the century. "I've never seen such a dearth of new fab starts," commented analyst George Burns of Strategic Marketing Associates in Santa Cruz, Calif. "The value of new fab starts this year will be less than $15 billion -- half of the $30 billion in new starts two years ago.[ so as a percent of chips a meagre 11% - that is well below the norm in the same way that in 1994-6 the chip equipment spending was well above the norm.] "Chip companies are now overcorrecting," said analyst Bill McClean, president of IC Insights Inc. in Scottsdale, Ariz. "Everyone has taken on a death march mentality [in terms of capital spending]," he said. "Hitachi, for example, has announced 'zero spending' on semiconductor capacity in the second half of the fiscal year [ending March 31, 1999]." And like other observers, McClean believes that these cutbacks will probably come back to bite the industry in 2000. "We saw the same situation in 1992," he recalled, referring to the shortage of new wafer-processing capacity that preceeded the 1994-1995 boom. ---- This has been my thesis since this Feb. and even though it is very difficult (and painful) to have to sit through the last few months (and it could get worse - who knows?) there is gold somewhere at the end of the nightmarish rainbow. Also as Patrick is absolutely right in pointing out the higher end capacity will be even more capacity constrained and that foreshadows good times likely even sooner than the general uptick trend. However the economies need to improve because even though I think there is a lot to be said for the newer products it is now clear to me that even with the newer rapid product cycles it is tough for a company with almost 2 bil. in revenue to compensate for a slowdown in more mature products ( of course with LSI "mature" is only a relative word.) ---- And the negatives for the chip equipment makers: The drop is so big, in fact, that he estimated that investments in chip manufacturing will not get back to the 1997 level until around 2001, the VLSI Research analyst predicted. ---- I suspect we will see fab upgrades but no new fabs - LSI being one of the lone exceptions (again much smaller line widths so it really is not an exception since there ain't much of this around). ---- Also, courtesy of the CRUS thread & DJBEINO: semibiznews.com ---- If the trend says 17% then any long period below that trend means we should catapult strongly well above the trend for a few years to get back to the long term average. ---- Shane.