Tony Sagami (Harvest Advisors) submits: Compare the share prices of Intel (INTC) vs. the shares of Taiwan-Based Siliconware Precision Industries (SPIL). While Intel's shares have stumbled and tumbled for the past twelve months, SPIL's shares have been skyrocketing. This is not just due to the vagaries of the market. There's a fundamental reason behind it and a major lesson to be learned from the experience.
Siliconware Precision is a support player in the semiconductor world. It receives unfinished chips from its customers, tests them, and then puts them into specialized protective casing for use in products like computers, digital cameras, cell phones, and cable modems. For example, the "Intel Inside" logo that you're so used to seeing is stamped on a Siliconware Precision casing.
Business is booming. Annual sales have jumped from $650 million in 2002 to $1.1 billion in 2005. More importantly, the bottom line has tripled from $60 million in $202 million. Last quarter, Siliconware Precision reported third-quarter profits of 14 cents per share, which was 8% above consensus.
Another big difference: Despite its rapid growth, Siliconware Precision is selling for only 12.8 times forward earnings. For a company that just reported a 27% quarterly increase in revenues and a 64% increase in quarterly profits, that's a heck of a lot cheaper than most U.S.-based counterparts.
Now, I am not suggesting that you rush and buy Siliconware Precision right now. The stock has run up too far too fast for my blood, and a correction is due. All I'm trying to point out is how important it is for tech investors to think globally.
And more importantly... to think Asian.
SPIL 1-yr Chart
INTC 1-yr Chart