Cary --
I appreciate all view points, positive or negative.
My optimism for the semiconductor sector is based on a close following of fiber optics, in particular, and broadband technologies, in general.
A few random comments from last week's optical networking conference in San Francisco:
* Ciena (Steve Alexander): bandwidth demand remains insatiable. . . routers displacing SONET multiplexers. . . GE and 10GE replacing SONET in access networks. . .
* Nortel: Optical networks double every 9 months; nodes double every 18 mos. . . . numbers coming out of RHK are outdated by the time we see them. . . all under-estimate market. . . investing $1.9 billion in optical networking . . .
* Sycamore (Dan Smith): DWDM is just table stakes. . . 2000 and beyond, must scale the network. . . building all-optical islands. . . building technology to link islands. . . moving from 50ghz spacing to 25 ghz. . . from OC48 to OC192 to OC768. . . optical networking will be $17 billion by 2004 . . . this (optical-networking) transformation is as big as from analog to digital. . . this is a substantial wave. . .
* Calient (out of group that became Siara and Cerent): optical networks will have 10X the growth of electronics. . .
* Wu-Fu Chen --- "DWDM was $3.1 billion in '99, will grow to $15.2 billion in '03 --- 23% CAGR: SONET was $7.7 billion market in '99, will grow to $25 billion in '03, 34% CAGR. . . optical switching in US will be $427 million in '00 and grow to $6.4 billion in '03, 97% CAGR; optical components were $5 billion in '99 and will grow to $23 billion in '03, 46% CAGR. . . . components are 80% of systems' cost. . . network communications ICs were $350 million in '99 and will grow to $3.4 billion in '03, 87% CAGR. . . components area is key, that's where fundamental differences are. . . valuations are high b/c of scarcity. . ."
* One speaker said the industry was in year-5 of a 25-year cycle; another said we're in the second inning of a 9-inning game. Choose your metaphor, the message is the same.
In their recent conference calls, JDSU's Josef Straus said they were ramping production by a factor of 4 and SDLI's Don Scifres said they were ramping by a factor of 5 across all communications products, both within 12 to 18 months.
Recent expansion announcements:
1) Corning --- will triple capacity:
corning.com
2) Lucent ---
lucent.com
lucent.com
3) Nortel ---
nortelnetworks.com
4) Alcatel ---
alcatel.com
[forecasts growth in Asia:]
Singapore, June 6, 2000 - Alcatel today announced it forecasts orders in Asia Pacific to increase by more than 60% in 2000, driven by strong growth in the broadband access and optical networking markets in the region. Alcatel registered more than 100% growth in orders in Asia Pacific in the first quarter of 2000 compared to the same period in 1999.
These are just random quotes and comments, and certainly the market will cause many stocks to have wild swings. That's why I like a stable company like AMAT --- one that will benefit from the burgeoning communications' market no matter which products or technologies carry the day.
Looking at today's drop I'm actually hoping it continues. I've been trimming back for several weeks and have a full quiver ready and waiting.
Incidentally, my largest position is SDLI and has been for a long time. I'm holding CMTO as I think the cable market will eventually take off.
Pat |
