Semi Industry Looking Up as Sales Continue to Outgrow Capacity
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For the second consecutive month, worldwide sales of semiconductors rose sharply in September, the Semiconductor Industry Association reported. Global microchip sales in September were $22.6 billion, an increase of 5.9 percent from September 2006 when sales were $21.3 billion.
5.9% probably doesn’t sound like stellar growth, and it isn’t much special. However, compared to the growth in industry capacity it is strong. And since price is a function of both supply and demand, sales growth that exceeds capacity growth should ultimately have a positive impact on pricing.
Disclosure: author has a long position in the Semiconductor Holdrs ETF (SMH) and put options against shares of Lam Research (LRCX).
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