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To: Skeeter Bug who wrote (41385)	12/12/1998 3:56:00 PM
From: MR. PANAMA (I am a PLAYER)	Read Replies (1) \| Respond to of 53903

Just wanted to make sure thread was kept fresh today with at least one well thought out post hahahaha

To: Skeeter Bug who wrote (41385)	12/12/1998 9:47:00 PM
From: DJBEINO	Read Replies (1) \| Respond to of 53903

Semi recovery: A careful balance Tad LaFountain; Needham & Co. Inc. We believe the semiconductor industry is positioned for a repetition of the 1984-86 experience, when the industry continued to cut capital spending as device revenue improved. As capital spending has declined throughout 1998, it has taken on a sequential pattern that should lead to some very difficult comparisons for the first half of 1999. Even with the moderate quarter-to-quarter gains in capital spending next year, it is unlikely that the annual gains in the second half will be enough to keep total 1999 spending from falling below 1998. The process of realigning industry supply with demand that began earlier this year is only partially completed. If this process is prematurely terminated, the industry runs the risk of interfering with the cyclical recovery that is forecasted to begin in the second quarter of 1999. The typical seasonal patterns of the past three months cloud the issue and have led many observers to conclude that the semiconductor business has already begun its turn. Strength in the PC sector is cited as confirming this view. There is no way to prove this assertion other than to wait. But the claim should be tempered with some observations. First, there are more microprocessors coming on the market next year than PC market growth is likely to absorb. Intel and Advanced Micro Devices have sufficient capacity to supply all of the market's needs, and additional suppliers are intent on catering to the market's low end. However, the addition of large amounts of on-board cache to high-end MPUs could soak up enough silicon to reduce the effective supply, bringing the market into alignment. Second, the DRAM pricing bump in the past several months has been aided by the willingness of South Korean suppliers to hold production below capacity. It now appears that this dynamic has changed, and Korean production is being aggressively ramped to higher levels. It still appears the industry is moving towards supply/demand equilibrium and that the stage is being set for a typical and impressive growth period. Unfortunately for component buyers, most growth periods are accompanied by tight supply and rising prices; this type of environment appears to be on schedule for the second half of 1999. It will soon be a new year and a whole new purchasing climate. techweb.com