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

To: shane forbes who wrote (30751)	5/31/1999 9:45:00 PM
From: Jack Kunkle	Read Replies (1) \| Respond to of 70976

Shane: Perhaps this is what is in Katherine's data. As more and more functionality is added into one device, consolidating the number of discrete components, the price we would pay for such a device should at most be equivalent to the sum total price of each discrete component assuming the end product performs exactly the same in all respects. I would argue that in the case of system-on-a-chip SOC the incremental benefit to the end user will be exponential and thus the economic price will be substantially lower than a system incorporating several discrete components. Using this argument and real dollars is the price of a Ford today higher that a Model T was in 1927? Still the price trend for a SOC over time is downward. Regards, Jack Kunkle

To: shane forbes who wrote (30751)	5/31/1999 9:55:00 PM
From: Jack Kunkle	Read Replies (1) \| Respond to of 70976

>And in such cases if ASP goes down, revs will be down or vice versa > True-- But what about margins? This is where AMAT fits into the picture. ASIA was drastic. I believe that there was a demand shift to the left. This was atypical. Manufacturers were not able to finance their purchases because they had negative cash flow. Big problem!!!! If ASP's trend downward along a normal curve" manufacturers can learn (enhanced yield, shrinks, etc.) to keep up in what is a nice experience. Hopefully elasticity of demand kicks in to accommodate volume production. This scenario is normal. Regards, Jack Kunkle