Semiconductor Quarterly Industry Update highlights:
The Mid-Cycle Correction is Over
18 August, 2000
Merrill Lynch Global Semiconductor Team
Today we are releasing our quarterly industry update.
The concerns that underpinned our mid-cycle correction thesis are beginning to dissipate, and semiconductor stocks globally are well below their March highs. We believe that the mid-cycle correction has ended - we would advise investors to begin buying semiconductor more aggressively.
Names in the communications-oriented, which include AMCC, Broadcom, PMC Sierra, Transwitch and Vitesse Semiconductor, and foundry businesses are of particular interest to us in the current environment. We would focus investors on names including Texas Instruments, ST Microelectronics, Cypress Semiconductor, Atmel, National Semiconductor, Analog Devices, Taiwan Semiconductor Manufacturing Corp and Chartered Semiconductor.
We have also revised our estimate for global revenue growth upwards, from 32% to 40% for 2000 and from 21% to 26% for 2001.
Improving pricing underlies our new forecasts. We believe Capital spending relative to forecast revenue and volume in 2000 remains at reasonable to low levels, and we expect a period of sustained pricing strength in the latter half of the year as capacity restrictions really begin to bite. |
