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

To: Proud_Infidel who wrote (26785)	12/1/1998 5:08:00 PM
From: Tony Viola	Read Replies (1) \| Respond to of 70976

Brian, >>>We are predicting that the semiconductor capital equipment industry will continue to grow even faster than the semiconductor industry, at a compound annual growth rate of 20-25%.<<< How does that work? Is it because of so much "new stuff" on the horizon like 0.18, 300mm, copper, etc.? I don't know if I believe it, though, especially with Intel saying they'll be doing the cost saving thing and re-using a lot of equipment for 0.18. Not that Intel is all there is, but they should wake up a lot of other semis to look that way also (if they already weren't). Tony

To: Proud_Infidel who wrote (26785)	12/1/1998 5:24:00 PM
From: Gottfried	Respond to of 70976

Brian, thanks for the link! An excerpt from the story: "We are predicting that the semiconductor capital equipment industry will continue to grow even faster than the semiconductor industry, at a compound annual growth rate of 20-25%. This is what has made it such an attractive industry for investors," said Linda Strunk, senior capital equipment analyst for Warburg Dillon Read. "The high rate of growth is a function of the increasing amount of value that equipment manufacturers are providing for semiconductor makers." While participants differed on the quarter in which the recovery will begin, most felt it will occur in 1999. "We see good prospects for the future, with 5-10 percent capital spending growth in 1999," said Noriko Oki, vice president of Morgan Stanley Japan Ltd. "The outlook for technology-driven equipment buys is much better than capacity-driven buys." If cap spending growth in '99 is 5-10%, that still leaves Applied way below normal levels of orders next year. To look at recent SEMI orders... geocities.com Since NEXT year's orders should drive the stock price, it doesn't look promising near term. Maybe the institutions will make an exception and look ahead to 2000? Gottfried bullish on DD stocks

To: Proud_Infidel who wrote (26785)	12/1/1998 5:32:00 PM
From: Katherine Derbyshire	Read Replies (4) \| Respond to of 70976

With all due respect to Ms. Strunk, it's fundamentally impossible for a sector to grow faster than its customers over the long term. If the equipment industry grows faster than the chip industry, it will consume a larger and larger fraction of chip industry revenues, thereby squeezing chip industry profit margins and forcing reductions in capital expenditures. Capacity building in excess of market growth is what got us into this mess in the first place, remember? I follow Ms. Strunk's logic: chip equipment adds value, so chip companies cut other expenses and/or get faster yield ramps. I don't buy it though. A process engineer costs the same whether he works for AMAT or INTC, so the total cost of process knowledge across the industry stays the same, or goes up. INTC may hire fewer process engineers, but they then pay a premium to use AMAT's knowledge. Katherine