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

To: Katherine Derbyshire who wrote (30764)	6/1/1999 8:55:00 AM
From: Ian@SI	Read Replies (1) \| Respond to of 70976

Katherine, I wouldn't rush to the conclusion that "industry forces" will slow, stop or reverse the rise in ASPs any time soon. 1. Fabs continue to get larger in terms of Wafer Starts Per Week. 2. Innovative new equipment keeps coming out of "nowhere" to reduce the average cost per transistor produced. 3. Much progress remains in making existing equipment and processes more productive. Each of the above will allow the continued integration of multiple discrete chips; more transistors per chip; with more value and a larger selling price per chip. i.e. - I doubt whether ASPs for chips will stop growing any time soon. And after all the times you've painstakingly made that point, I believe the thread would forgive you if you just let anybody hold whatever view makes them feel best. Even if that view is not based upon any facts, and may be the opposite of reality. FWIW, Ian.

To: Katherine Derbyshire who wrote (30764)	6/1/1999 11:19:00 PM
From: Clarksterh	Read Replies (1) \| Respond to of 70976

Katherine - That's an excellent point, and its certainly possible that a shift away from climbing ASPs is coming. Such a shift would require significant changes in the fab business model, as it would make paying for new technology more difficult. I think you missed my point, which was: 1) That communications chips are, in general cheaper than the ASP for the PC sector. (I don't know this for sure but I'd be surprised if it weren't true) 2) Communications chips are not (repeat not) lower margin than PC segment. (This is approximately true, at least for the companies I follow). 3) As PC semi's stop growing, and communication chips make a bigger piece of the pie, the ASP for the whole of the semi world will decline even though the ASP for each individual sector continues to increase. (This is complete speculation, but there is no reason it is inherently false.) This may break the empirical model which says declining ASP for the whole semi industry signals a decline in cap ex.. As I have said before, I'm suspicious of 'this time its different' arguments, but I put this forward in the interest of debate. Clark