Jay,
The AMAT conference call link suggests that semi's definitely have not peaked.
I liked the $3.7 billion backlog and the fact that
55% of demand for foundaries was for fabless customers.
Fabless customers are more nimble. They have to be nimble to survive. And the ones that will survive will be those who have specialty semiconductor products that cater directly to the portable computing/wireless markets that characterize the Post PC era. Flash is definitely one of the major players here, particularly in the ultra-high density market where SanDisk resides.
The large foundries like those in Taiwan are also reporting record results. The likes of TSMC and UMC are selecting foundry partners, many of whom are fabless or fab-light, that will give some reasonable guarantee for steady growth and bookings over the medium to long term. SanDisk is giving UMC all the business it can handle and we know that SanDisk could use a lot more capacity. Wily's posts from yesterday indicate that demand for flash cards is about to go from a horizontal growth curve with a slightly upward grade to a vertical line. Moreover, the removable flash and the embedded flash markets will both contribute to SanDisk's bottom line for reasons we have already explained;
companies like FLSH and SSTI need leading-edge, ultra-high density flash for mass storage applications!
I suspect these higher end flash chips will be in great demand on many other fronts. The digital camera and MP3 crazes aren't occuring in a vacuum.
Jay, if you look at the number of people who are poised to upgrade from black-and-white Palms to the newer color LCD handhelds you see two trends. First, there will be a renewed interest in flash storage modules, both in the form of CF and proprietary "backpacks". Also, as the OS's become more complex there will be a need for larger flash RAM modules for the embedded OS software like Palm's OS or Pocket PC. Basically, any portable device will have multiple uses for flash of variable density. The demand for specialty semiconductors will continue for years to come. Flash is one of the "new kids on the block" and I would not doubt that the total MB of flash sold will reach some astounding number. Although I am not a representative example, I wanted to say that I currently own more flash RAM than I do DRAM and SRAM combined.
I think it is plausible that Solomon Smith Barney used Mr. Joseph as a sacrificial lamb. The degree of skepticism that surrounded the original report is now supported by the recent reports and projections we have seen over the past few days. The AMAT report will hopefully remove the shadow of doubt that has been cast over the NASDAQ.
BTW, SanDisk is trading at a multiple of less than 40 based on my 2000 estimates of $1.42 if one considers cash net of debt. I haven't projected 2001 earnings, but I wouldn't doubt that we'll look back in 18 months and find we are currently trading at a forward mulitple of 25 or less.
Aus |
