Merines At DSL

It is no secret that recent economic failing has taken a toll on all company’s top lines. Particularly in the chip sector, the business convention of cutting capital spendings to conserve cash and keep the balance sheet clean has translated into slower growth in sales of chips to fuel the servers, computers, and small devices that power so many of the country’s companies. Thankfully, shifts toward mobile connectivity has kept demand for certain semiconductor components strong, and many manufacturers are in the somewhat fortunate position having to increase capacity to meet current and future need for the chips that will inevitably find their ways into yet more technological uses as innovation offers new paths to greater productivity and entertainment.

For many manufacturers who prefer old school fiscally conservative models, however, raising capacity through cap-ex can carry with it a higher risk profile, given the possibility of a slower-than-expected economic rebound. To mitigate the danger of this decision, many manufacturers have found smart ways to reduce risk by trimming the cost of increasing capacity.

For instance, chip makers like Micron, AMD, and Applied Materials have found ways to thin the cost of adding gas delivery systems by purchasing lower-cost refurbished gas cabinet units and components. These refurbished units, which can account for a sizeable portion of equipment expenses, sell for a fraction of the cost of newer units and are re-manufactured to the same specification of new units – all endorsed by a safety and reliability guarantee. While gas delivery systems carrying any refurbished gas cabinets that aren’t likely to be the most cutting edge units, manufacturers can use them as a stop-gap to increase capacity in processes that require less than the cutting-edge technology necessary to manufacture the freshest, tiniest, and most complex chips.

Because the tempo of innovation in the chip market is so rapid (Moore’s law), the procedures and machinery used in manufacturing can quickly become outdated. A delivery system with gas cabinets is therefore vulnerable to great depreciation – depreciation that is downplayed by purchasing re-manufactured equipment that was purchased by the re-manufacturer at that already depreciated price. Lower depreciation frees up cash on the records and provides companies the solid financial power they need to make necessary investments in cutting edge technology and capacity that will be in great demand when the economy rebounds and trends in smart devices, mobile computing and connectivity, and solar energy actualize their potential.

This entry was posted on Thursday, October 8th, 2009 at 1:38 pm and is filed under business. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.