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Strategies & Market Trends : Z Best Place to Talk Stocks
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To: marvin litman who wrote (20890)10/2/1999 2:45:00 PM
From: DanZ  Read Replies (1) of 53068
 
Semiconductor stocks and IRF.

Marvin,

I can't think of very many semiconductor stocks that have been good long term investments. Most of them are highly cyclical and just oscillate with their business cycle. This is especially true for companies that sell commodity semiconductors. Intel has prospered over the long term because they have a dominant position in a market that borders on monopolistic. Texas Instruments has done much better this year than during any period going back to 1992. I believe that this is due to their expansion into digital signal processing which offsets the limited growth in their commodity gate chip business that has been their bread and butter for so many years.

I would only hold IRF long term if they are moving into business that give them pricing leverage or better growth. The rectifier market is highly competitive and too commoditized to offer them this flexibility. Companies that sell commodity semiconductors are at the whim of the market to set their prices, and these stocks just tend to follow the trend in the SOX year after year. IRF is a very technologically motivated company, holding patents on many new diodes, and even designing the first MOSFET. However, I don't think they will make their shareholders rich over the long term with the types of products that they have been selling for the past 50 years.

Best of luck,

Dan
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