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 expenditures 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 businesses. Thankfully, trends toward mobile connectivity has kept need for certain semiconductor components strong, and many manufacturers are in the somewhat fortunate position having to increase capacity to meet current and future demand for the chips that will unavoidably find their ways into yet more technological uses as innovation offers new paths to greater productivity and entertainment.
For numerous manufacturers who favor old school fiscally conservative models, however, increasing 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 chance of this decision, many manufacturers have found handy ways to reduce risk by reducing 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-priced refurbished gas cabinet units and components. These refurbished units, which can account for a sizeable portion of equipment expenditures, sell for a fraction of the price of newer units and are re-manufactured to the same specs 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 gain capacity in procedures that require less than the cutting-edge technology necessary to manufacture the freshest, tiniest, and most complex chips.
Because the pace of innovation in the chip space is so rapid (Moore’s law), the methods and machinery used in manufacturing can quickly become obsolete. A delivery system with gas cabinets is therefore subject to great depreciation – depreciation that is faded by purchasing re-manufactured equipment that was purchased by the re-manufacturer at that already devalued price. Lower depreciation frees up cash on the records and provides companies the strong financial position they need to make essential investments in cutting edge technology and capacity that will be in sizeable demand when the economy rallies and tendencies in smart devices, mobile computing and connectivity, and solar energy understand their potential.
Posted under business
This post was written by admin on October 15, 2009
