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To: Zeev Hed who wrote (7731)	3/20/1999 7:19:00 PM
From: Katherine Derbyshire	Respond to of 10921

ASP turns out to be a pretty good measure of the health of the chip industry. Manufacturing cost/chip is more or less constant (with lots of simplifying assumptions), so more ASP means more profit and more money to spend on new fabs. As for Amdahl's dream, I'm not sure wafer scale integration is even desirable. You lose a lot of economics of scale that way, as the FPD folks have found out. System-on-a-chip integration is desirable, because it does preserve the economics of scale (within limits, because an SOC process is typically more expensive than any of the component processes). Will sales increase? Well, do you mean that in dollar terms or unit terms? If ASP goes up and units go up, then the total in dollars goes up and everyone is happy. If ASPs go down and units go down (1997-98), dollars go down and everyone is unhappy. If ASPs go down and units go up (1996), you're happy if your costs are lower than everyone else's. If ASPs go up and units go down, then you're happy if you sell the more highly integrated chips. In both of these last two cases, the total for the industry would depend on where the balance between ASP change and unit change fell, which in turn probably depends a lot on macroeconomic conditions. Katherine