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Technology Stocks : Vitesse Semiconductor

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To: Rex Dwyer who wrote (619)	5/19/1997 6:49:00 PM
From: SI-Shark	of 4710

Rex, It is real hard to make any sense of the GaAs market, all that I do these days in GaAs is channel trade on intraday trends. Since every RF semi company is running at capacity the customers just have to pay whatever the semi companies ask, there is no point in shopping around you will just loose your allocation. This means that earnings will stay strong for a while to come. So on that basis the market still has a way to go. As for the long term, who knows. I expect RF silicon solutions will price GaAs out of the volume end of the market, but that wont happen until excess capacity comes on line. I think we will see a situtation develop similar to the DRAM market in late 95. One day someone will realize that there is excess capacity in the system and prices will start to drop. For the moment RF IC's are in the same boat that DRAM was in 94-95. Everyone knows it is the place to be and is ramping up capacity as fast as they can. The problem is that demand seems to be always one step ahead of supply, so who knows when excess capacity will be reached. Si-Shark

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