Hi, folks...
just returned from trip to Korea.
Even though it is a bit late, I wish everyone here
a Happy New Year.
As I was traveling in Korea, I observed following things
that could be very bullish trends for both the semiconductor and semiconductor equipment industry:
1) I was quite surprised by a rapid rate at which the
high speed internet infastructure was being deployed in
korea and other countries in Asia. In Korea, for example,
24 hour ad for high speed service either for XDSL or cable
modem was running on certain channels of TV. In addition, the
government has put a heavy priority on growing the telecommunication
business in order to stimulate the national economy. Such growth in the communication
business in Asia will definitely create a steady demand
for chips.
2) secondly, the wireless business in asia is booming.
Everyone, I mean, everyone had a cell phone except me
while I was there. The wireless business is expected to
grow again in the year 2000 and this also bodes well as
far as creating the demand for chips.
3) Sometime in the middle of 2000, new sony playstation
is expected to be released along with other game players
from Nintendo and Sega. Consumer electronics such as game
players, mp3 players, and handheld internet devices will
create an additional demand for the chips.
The year 2000, in my humble opinion, will be a banner year
for the semiconductor industry growth. Firm demand for
chips from high speed internet infastructure business,
wireless business as well as the consumer electronics will
provide strong support for the robust growth. Only concern
that I have, which could affect the demand and supply equation,
is the situation with DRAM pricing.
If DRAM price continues to erode, robust semi-business growth could be hampered and stock price of the equipment vendors could stagnate.
However, I am also optimistic that DRAM price will remain relatively stable over the year 2000.
This is because of the fact that many DRAM companies are still very
hesitant about spending aggresively to add capacity. This
includes Korean companies such as Samsung and Hyundai.
In addition, during the last down turn, many Japanese
companies have exited the pure Dram business and converted
their business in ASIC area. EVEN the remaining
DRAM companies are trying to focus on the high margin
memory products instead of low margin commodity memories
such as typical 64Mb module. Finally, with advent of Window
2000, the demand for memory could rise in the PC industry.
These trends will check demand-supply situation in balance
in DRAM sector.
I believe that we will have another very good year. Companies such as AMAT, LRCX, NVLS, and KLAC will continue
to outperform the market. I still believe in the operating
leverage and huge earning potential of LRCX. I might liquidate some of LRCX shares towards end of this year
in anticipation of the sector correction as i am expecting
a little plateau period of earning growth before the 300 mm
product ramp-up. However, if such correction indeed occurs,
I will not be hesitant to add more shares. Good luck to
everyone this year. |
