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

To: Katherine Derbyshire who wrote (26512)	11/19/1998 9:56:00 AM
From: Jeffrey D	Read Replies (1) \| Respond to of 70976

Katherine:<<In other words, if demand for chips keeps growing at historic rates, 300mm wafers will be needed to stay on the price/performance curve, lots and lots of 300mm fabs will be built, and the equipment makers will be happy. If demand for chips stalls, the equipment makers will be unhappy, regardless of the wafer size. FWIW, my conversations with Dr. Castellano suggest that he is a thoughtful analyst, but that he also enjoys being provocative. I would read the entire report before investing money based on his conclusions. >> Thanks Katherine, I believe your explanation of the process is correct. In addition, why would Morgan and AMAT be pushing 300MM if it meant losing business? I would, however, be interested in reading Dr. Castellano's full report. Do you have it at your website? Jeff

To: Katherine Derbyshire who wrote (26512)	11/19/1998 11:54:00 AM
From: Katherine Derbyshire	Read Replies (1) \| Respond to of 70976

Robert Castellano reads this thread, but is not an SI member. He asked me to post the following. The opinions expressed are his, not necessarily mine.--Katherine Katherine, Read your comments on the AMAT thread, and I thought I would respond with my thinking. Semiconductor manufacturers have been meeting demand by adding 20 new fabs and 10 retrofits per year (+/-). Even with capacity utilization at 90+%, what was all that was needed given the increased conversion from 5-6 inch fabs to 8 inch, and die shrinks that effectively double the number of chips on a wafer. The transition to 300mm will more than double the chip number again. Even if capacity utilization increased back to 90%+, that's twice as many die as needed. As I mentioned about the roller coaster ride of inventory correction and overcapacity, it is causing semiconductor companies to re-think their strategy of building for the sake of building, as they did a few years ago. Also, I mentioned the overcapacity issue for the "first half of the next decade". Sure enough, demand will catch up, but it will be a long 5-7 years. If you speak with Intel, they will concur with me -- they are going to 300mm as a means of reducing the number of fabs they need to build. And even if the same number of new fabs (20) were built, semiconductor companies would not buy all the tools to stock them anyway -- why purchase 20 steppers at $6 million if you only need to use 10? Fabs would be partially stocked with equipment, which would be purchased on a "need to buy" basis. Either way, only half the equipment would be needed. Applied got the issue started by trying to knock out the little guys and be the first on the market with a full suite of 300mm tools coinciding with the timing for equipment purchasing decisions. As I've said before in a previous press release, they forgot that they weren't in the lithography business and that 300mm tools needed to be available for all stations. This wasn't the case, and by the time the "hype" wore off, the recession in the industry took hold. But in my opinion, it was close to divine intervention. If SEMI forecasts had been correct, with so many 300mm pilot lines online by now, there would have been even more overcapacity, which would have delayed the uptick we are now seeing. Thanks for the statement about being provocative, and you are correct. But I don't want to loose credibility in the industry by saying something I don't really believe in, just for the sake of being provocative. I call it as I see it, shooting from the hip as a means of trying to overcome the industry perspective that if your company name doesn't begin with D or V, belonging to to "old-boys network", you have no credibility. By the way, our web site is www.theinformationnet.com Also, if you see my point, I'd appreciate it if you put it on the AMAT thread, to give more of my perspective. As the report sells for $850.00, it would give the readers a little more, and inexpensive, insight on my way of thinking. I read the thread several times a day and empathize with the investors, although I am not one. Kind regards, Robert -- The Information Network 8740 Lyon Valley Rd. New Tripoli, PA 18066 Dr. Robert N. Castellano Phone: 610-285-4548 Fax: 610-285-4547 E-mail: tin@theinformationnet.com www: www.theinformationnet.com