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Spending on semiconductor equipment will drop 15 percent this year. Does that matter? Only if you've forgotten why they call it Silicon Valley — something to do with computer chips, right? The chip factories, or "fabs," have moved abroad, and today's entrepreneurs fantasize about micropayments, not microprocessors. And yet the tech economy still ebbs and flows with the waves of chips designed here, stamped out overseas, and assembled into gadgets that arrive at our ports by the containerload.

Right now there's a glut of chips, which keeps the price of everything from servers to iPhones low. What happens when chipmakers ratchet back spending, and component prices rise? Profit margins get squeezed and spending on frivolities gets cut back. Chipmakers' capital-equiment budgets, not the subprime crisis, are what you ought to be freaking out about.