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Technology Stocks : Speedfam [SFAM] Lovers Unite ! -- Ignore unavailable to you. Want to Upgrade?

To: Mr. Sam who wrote (3250)	12/1/1998 1:08:00 AM
From: SteveC	Respond to of 3736

Maybe this is wishful thinking, but this is the first article I've seen in a long, long time discussing an impending shortage of capacity in the industry. From CMP's website: Wafer Capacity Could Fall Short In 2000 (11/30/98, 8:07 p.m. ET) By Staff, Semiconductor Business News Third-party wafer-foundry capacity could end up in short supply by the year 2000 if chip manufacturers increase their use of contract manufacturing, said a new report from Semico Research in Phoenix. Currently, there is a glut of silicon-foundry capacity, but Semico said that condition could quickly change if major semiconductor makers decide to shift more of their wafer processing to third-party fabs at a time when chip markets begin recovering from the current slump. The Phoenix market researcher estimated that demand for processed wafers is increasing at a compound annual growth rate of 13 percent over the next five years. Silicon-foundry demand is expected to grow at 21 percent in the five-year period. Today, fab-operating chip suppliers -- known as integrated-device manufacturers, or IDMs -- get about 5 percent of their processed wafers from foundries, according to Semico's report. If IDMs increased their use of foundries to about 10 percent of their processed wafer, the silicon-foundry business could grow 40 percent, which would lead to a potential shortage of capacity in 2000, the report said. A number of major IC manufacturers are planning to increase their use of outside foundries as part of a restructuring of their business models and a hedge against uncertain times. Motorola, for example, intends to get 30 percent of its chips from third-party foundries by 2000 compared to just 7 percent last year. In four years, Motorola wants to move 50 percent of its wafer-processing needs to outside foundries.

To: Mr. Sam who wrote (3250)	12/1/1998 2:51:00 PM
From: blake_paterson	Read Replies (1) \| Respond to of 3736

Mr. Sam: What do you make of the recent Intel PR re: limiting capex to 0.18mm technology buys? eg.: businessweek.com Excerpt: <<Intel is looking for even bigger savings in production costs. It is accelerating by six months, to mid-1999, its move to next-generation chip manufacturing technology: Shrinking the width of circuits on chips from 0.25 microns--about one-four-hundredths of the thickness of a human hair--to just 0.18 microns. That lets Intel make 75% more chips per silicon wafer, dramatically slashing its unit costs. And instead of buying all-new production gear, the company plans to reuse 70% of its current equipment as it shifts to 0.18-micron widths. These and other moves should raise gross profits by more than $1 billion in 1999.>> Does it change your outlook for SFAM? TIA, BP