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To: Jock Hutchinson who wrote (15758)	10/19/1998 3:33:00 PM
From: patrick tang	Respond to of 25814

That's exactly how I see things (and I think Wilf's forecast is the same) - people lost so much money in 0.35um that investment in 0.25um is going to fall way short. Kuotech lost the whole 0.35um fab when UMC did a hostile take-over in Taiwan. Charter never did make much money. All the money the Koreans and Japanese last. The Koreans, with their borrowed money, with no further funding will be just about out of the running after this. Mu sank $800M or was it $600M in an empty shell at Lehi. Hyundai got another one of these empty shells sitting in Ireland. Seimens build a 0.35um DRAM in England that lost a whole bunch before they announced they are shutting it down. But I guess political pressures forced them to reconsider and now they are 'shopping' to sell it. TI/Acer lost a bunch. Tailand was going to build two fabs and I think they lost ~$500M in the plant building phase with nothing to show for it now. Vanguard lost money. I doubt that Powerchip made money. Promos, Seimens + Mosel-Vitelic, lost money. IDTI build a huge fab and now they are writing off $140M this Q on brand new 0.35um capacity that they never used because the technology passed them right by. To say 0.35um was a bloodbath has got to be the understatement of the century! Another hint of semi bottoming - the semi equipment guys are finally shutting down and laying off capacity en mass. And semi upturns only comes after semi-equipment bottoms. Shane's assumptions IMO are perfectly reasonable given the boom and bust nature of this business - remember Wilf's comment that there is not such thing as 10% to 20% growth in this industry? either we go boom or we bust. Another indication of this is the unit shipment - unlike previous downturns, in this one the unit shipment never let up. Being growing big times. Never been a demand issue. I don't see this changing now, as after the last rate cut, I do not see a US recession coming. In fact, I think we'll get another rate cut coming next month. Remember, fed fund rate had historically over the last 40 years ran 1.5% to 2% above inflation. The last 2 to 3 yrs we ran a full 2% above inflation. So even after cutting the 1/4% + 1/4%, we have a long way to go to just get back to reasonable interest rate. As for supply, that is going to change in a big way when we get to 0.25um now, balanced IMO, and the go sub-0.25um next spring. We are almost there. patrick

To: Jock Hutchinson who wrote (15758)	10/19/1998 4:24:00 PM
From: patrick tang	Read Replies (1) \| Respond to of 25814

0.35um fabs need not apply : Message 6072284 If ASICs lack behind CPU and DRAMs by 1 year, LSI's days are coming soon. patrick

To: Jock Hutchinson who wrote (15758)	10/20/1998 1:36:00 PM
From: patrick tang	Respond to of 25814

I think a lot of Jap. semis guys, once they get out of DRAMS, will get out of semi all together, can't fill the fabs: Message 6085086 Japan's chipmakers have enormous production facilities and personnel, and without the DRAM business, operating rates at mainstay domestic plants would plummet. If the companies were prepared for a full retreat, with massive extraordinary losses and widespread layoffs, that would be a different story. In another 6 months, with the 0.35um fabs almost obsolete, no money to go sub-0.25um, still needing sub-0.25um ICs with IP to put into their digital cameras or other gadgets, they will have no choice but to start ramping down those 0.35um fabs as well as going outside to seek partners to get IPs from. And that's the beauty of semis over making steel or cars - a factory for cars or steel will last you 20 years once it's built, the capacity just won't go away, even if it's moth-balled. A fab goes away by itself in 4 years and it's another round of players. Like a big stakes poker game, better win every round to remain in the game, but every hand is totally separate in itself. patrick

To: Jock Hutchinson who wrote (15758)	10/20/1998 1:41:00 PM
From: patrick tang	Respond to of 25814

Here's what everybody and their brothers try to do with their obsolete 0.35um DRAM fabs: Message 6081431 A 0.35um logic wafer probably isn't worth much nowadays, too much competition, capacity. By next year, when 'center of gravity' is 0.25um, the 'players' will be few and far in between. patrick