William Trent_

Turning Point for Semis May Be Just Around the Bend

Apologize for the late response - was out of town.

The data is culled from both SEMI and SIA. The overlay is possible but sensitive to scaling factors used. I have found the process useful in predicting trend persistency and turning points for stocks, as the reported fundamentals lag this indicator. However, the market does appear to be anticipating cycle activity earlier and earlier. The stock bottom used to lag the bottoms in this chart, recently it has been more coincidental, but it is entirely possible that the recent rally was in anticipation of this bottom.

Even if that is true, however, the longer-term considerations of the trend should still add value.

The Semiconductor Industry Desperately Needs to Go Private

Much of the capital could be replaced by increased reliance on the foundries. You don't want 3 companies building multi-billion dollar fabs when one will do. Instead, the three design firms should lease foundry capacity.

The Semiconductor Industry Desperately Needs to Go Private

The semis won't pay out a massive cash dividend, or they already would have. The idea is that PE firms would come in and instill capital discipline. Yes, FSL is capital intensive. The PE firm can reduce Capex and use the additional cash flow to pay out more dividends. If they can consolidate several firms so the overall industry becomes more capital-rational, mission accomplished and they IPO them back.

I agree, though, that the LBO firms have more money than they know what to do with, and may likely not know what they are doing by going into something so capital-intensive and cyclical.

Last Week's Semiconductor Suckers Rally

Sorry. It is growth in semiconductor sales (demand) less growth in orders for semiconductor equipment (supply).

Think Semi Inventories are High? Wait for the New Capacity to Arrive

It is certainly more priced in than when I first started talking about it. However, new chip equipment orders are still running at a far faster pace than semiconductor end demand. Until these get pushed out the market will not stabilize, and I don't think that is priced in yet - or at least does not offer room for a rebound in chip shares any time soon.