Consumer Electronics Show's New Launches Will Influence Israeli Firms

by: Shlomi Cohen

The giant Consumer Electronics Show in Las Vegas will include almost no Israeli public companies, since Israel's high-tech industry is focused more on infrastructures and less on gadgets. Among the companies which are in my portfolio tracked by "Globes", semi-Israeli chip companies SanDisk Corporation (Nasdaq:SNDK) and Marvell Technology Group (Nasdaq: MRVL) will present as will Sigma Designs (Nasdaq: SIGM), which after its acquisition of Coppergate, can almost be considered half-Israeli too.

There are several other Israeli firms in my portfolio which, despite not being in Las Vegas this week, will be influenced in 2010 by products launched there.

Behind the new TVs

Looking, for example, at developments in LCD screen technologies, I expect a positive effect on Orbotech Ltd. (Nasdaq: ORBK), and to a lesser extent Camtek Ltd. (Nasdaq: CAMT). Like many things in the world, televisions are also turning "green", with the advent of LED chip technology as the source for back lighting in place of current lighting technology.

What is currently behind LCD screens not only takes up more space and prevents production of thinner screens, but also uses much more electricity compared with LED chips, which will serve as the source for screens' backlit display for the decade to come.

At the show next week, several new models of LCD televisions with LED technology will be introduced. For example, Samsung (SSNLF.PK,), a global leader in the monitors market, reported this week that in 2009, it sold 2.6 million televisions of that type, and in 2010 it expects orders of 10 million. Orbotech is its monitor inspection partner, and with a sales growth forecast of four times the current level, it is reasonable to assume that Samsung's LED production lines, as well as those of other producers, are being expanded, and will continue to be expanded in the coming year.

It is known that Japan's Sharp (OTCPK:SHCAY), another Orbotech customer, is aiming for a situation in which, at the end of 2010, half of its screens produced will be LED-based, and that by the end of 2011, all of it screens will be.

Camtek, which specializes in chip inspection equipment, has made a strong entrance into the specific field of inspections during the course of production of LED chips.

It is known in the market that because of the large demand for these chips as a source of "green" lighting in many applications such as, for example, netbook screens, billboard advertising, and as outdoor lighting for buildings, there is not enough supply, and a bottleneck exists in production of LED-based television screens.

What's inside Apple's new computer?

It is reasonable to assume as well that Sandisk will launch new products this week. With everyone busy with the launch of new advanced telephones that will compete with the iPhone, the demand for NAND flash data storage solutions, internal and removable, in those phones, has grown at a dizzying pace.

What will be interesting this week in Las Vegas is to see if Sandisk finally abandons its hopeless race to develop Sansa media players that compete with iPods, and concentrates primarily on its two big growth engines for the coming years - flash solutions for telephones, and SSD drives for the enterprise and consumer markets.

In the personal computer market, SSD drives are only expected to be economic alternatives to HDDs next year, but Sandisk investors hope that perhaps a miracle will occur this month already, and Apple will go ahead and offer a SSD drive in its new tablet computer.

From an economic standpoint it is not likely, because those drives are still very expensive despite the fact that they have a tremendous advantage in saving battery time, and with Apple devices that is known as a sore point. On the other hand, it makes sense that at least a slot for expanding memory with a flash card, a huge segment that Sandisk leads, will be included in the tablet computer.

Disclosure: Author holds shares as part of his portfolio tracked by "Globes".

Published by Globes [online], Israel business news - - on November 17, 2009; Reprinted on Seeking Alpha with permission

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