Stardate 20010921.0700 (On Screen): A lot of people have never heard of Applied Materials. It's the world's largest manufacturer of equipment used for processing integrated circuits. It's an example of what's known as a "secondary industry", one which is in the business of creating and selling products to other companies, who use those products to make things directly for consumers. There are many of these companies and some of them are huge: Tektronix and Agilent are two more. They're important to watch because their economic fortunes tend to lead the rest of the economy. When primary companies begin to feel the pinch, they cut back on capital acquisition, and the secondary industries go into decline. When primary companies sense that a recovery is coming, they increase capital acquisition in anticipation, and the secondary companies boom. Generally the lead-time is six months to a year. So it is not good news that Applied is laying off 10% of its workforce; this bodes ill for a rapid recovery of the economy. It means that despite any public statements by the semiconductor makers, they actually think things will be bad for a long time because they're cutting back on capital investment. If they were really optimistic, Applied would be hiring.
(discuss)
