William Trent1

Intel and STMicroelectronics: The Art of the Deal

Intel/Micron is NAND flash, this one is Intel's NOR business.

Semis With Highest, Lowest Production To Sales Ratio

Ralph - I am comparing the amounts produced to the amounts sold to customers. If more is produced than is sold inventories will rise. If less is produced than is sold, inventories will fall. Too much inventory can be bad for future margins in one of at least two ways: 1) lower production, which due to operating leverage would mean each unit would have a higher cost; 2) obsolescence, which could lead to write-offs. Underproduction can mean lost sales.

Frank - You got two of the three potential reasons, with the other being a temporary shortfall (perhaps due to high seasonal demand or other factors.) In the case of MEMC, the prolonged underproduction is due to limited supplies of the raw material polysilicon. I would classify this as a production problem, but since it applies to all manufacturers it is not an MEMC problem. In fact, it is helping their margins since they are one of the few available sources.

Andrew - per my comment to Ralph, over/underproduction at fabless companies can impact margin through obsolescence or by missing out on sales if the inventory is not available. I think it is still worth looking at the trends for each company, although further analysis would require separating the companies into fab/fabless as well as other segments such as analog or memory.

Will it Take a Liquidity Crisis for Intel to Rationalize Capital Spending?

Nobody is advocating zero capex - I just think they need to spend enough to meet demand and no more. In the long run it is nearly a mathematical certainty that they will do so. It is the short term variations that result in cyclicality.

Will it Take a Liquidity Crisis for Intel to Rationalize Capital Spending?

they are smaller, but Intel appears determined to narrow the gap.

Will it Take a Liquidity Crisis for Intel to Rationalize Capital Spending?

From what I understand Intel is the one company pushing for the latest and greatest from semi equipment, insisting that Moore's law be followed to the letter. If they slow down, everyone else is likely to slow down.

And nobody <em>has</em&g... to keep making capital expenditures that don't earn an acceptable return on capital. In fact, their duty to investors is the opposite.

Making Sense of Semis: Does the Industry Still Have What it Takes?

Nice work!

The Chip Glut Is Beyond Semi-Serious

One word: Yes.

I still believe things will hit bottom when the orders for new supply start to grow slower than end demand.

The Chip Glut Is Beyond Semi-Serious

It may be weakening now, but it must have been strong at some point for the semis to be adding so much capacity. The problem with that is that orders can be canceled. Somehow the chip industry always believes the orders are for real "this time" even though they have been proved wrong over and over.

Eternal optimists, I guess.

The Chip Glut Is Beyond Semi-Serious

Chips are a global commodity, and the foreign producers are having considerable impact. Some of the data presented above are U.S. specific, while others I follow (such as the SIA Global Sales Report) are global.

Other dynamics, such as inventory levels, are probably something that can be extrapolated. If US chipmakers are building inventory it could mean that foreign manufacturers are taking share, or it could mean that foreign manufacturers are also building inventory. In the short term the latter is usually more significant that the former but it is something to be aware of as the counter-argument.

I would say the weakest data above, with respect to a more global chip industry, is the capacity utilization figure. With more new fabs built overseas than in the U.S., U.S. capacity utilization is less relevant to the total industry than it has been historically. By using the Fed data, I am making an implicit assumption that global fabs are all being utilized at roughly the same rate. Sometimes this will not be the case.

The Chip Glut Is Beyond Semi-Serious

Thanks.

I have been (publicly) bearish for approximately 1 year, and during that time the SOX is down about 5% vs. a 10% gain in the S&amp;P 500, so I wouldn't say the bearish outlook was invalid. Admittedly (which I have also noted) I may have missed the August bottom. The data just haven't reversed enough to warrant a turn toward bullishness on my part.

To be specific, I think the fundamentals are going to get much worse, but the market will look past the bottom in fundamentals and the stocks will recover before the fundamentals do. I am not confident, yet, that we have reached that point but it is possible that we have. Sorry I can't be more helpful than that.

As far as the article you referenced, I share Notable Calls' opinion.