Tony, on Aug. 24, AG Edwards published a positive article on the semis and the writer recommended TXN as one of his favorites. The writer saw semi-conductor growth slowing to 25% in 2001, but, if you look at Nokia's orders, under my Nokia News thread, it is hard to believe that TI's growth would slow to 25% since TI is the leading world producer for telecommunication chips.
Morning Comments from AG Edwards
By: AG Edwards
8/24/00
Analyst Christopher Chaney made the following comments in conjunction with his revised growth estimates for the semiconductor sector, from 32% to 40%, along with mentioning his favorite stocks in the sector.
Four quarters into the recovery, fundamentals within the semiconductor sector remain quite strong. The world economy, especially the Asia/Pacific, is considerably more healthy than it has been over the past several years. As a result, the sector is experiencing record unit demand.
(GLOBAL GROWTH)
Global economic growth is forecast at 3.7% and 3.6% in 2000 and 2001, respectively. The important Asia/Pacific region should grow greater than 4.0% this year and 3.2% in 2001. We could even see the dismal Japanese economy picking up steam. The latest forecasts calls for GDP growth of 1.7% in 2000 and 2.0% in 2001. Although we believe global growth will slow slightly in 2001 (especially in the United States), history shows that unit demand for productivity enhancing components such as semiconductors are generally unaffected by gradual declines, reacting only to global crises.
2000 FORECAST "We could see 373.3 billion units sold in 2000, 24.5% above 1999s level. Demand should be strong across all major sectors. Our unit forecast calls for growth of 23.6%, 24.5% and 27.4% in discretes, optoelectronics and integrated circuits (IC's), respectively.
Driving this growth is considerable demand from the communications sector as well as the booming consumer and portable markets. Average selling prices (ASPs) should see a moderate increase of roughly 5% in the integrated circuit and discrete industries, while we expect optoelectronics ASP's rise
16%.
Thanks to these price increases, due to supply constrained markets, sales growth in the semiconductor sector could reach 40% this year.
"Although we believe demand is sufficient to support 40% growth,additional capacity will be needed to reach this target. According to the Semiconductor Industry Association, capacity utilization reached 95% during the second quarter of 2000, only slightly above the 94.6% reported during the March quarter. However, wafer-starts increased 3.3%, sequentially, during the period. Similar increases in wafer starts during the third and fourth quarters of 2000 should give us the unit count we need to reach our estimate. We believe this is a reasonable assumption given the sales growth we have witnessed in the semiconductor capital equipment industry over the past year."
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"We believe those semiconductor markets that have experienced the greatest sales growth in 2000 will continue to see above average growth in 2001. More specifically, we would single out those vendors selling communications related IC's, particularly Programmable Logic, Flash Memory, and Digital Signal Processors and specialty communications and consumer IC's.
Positive rated stocks within our universe that have significant exposure to these markets are Analog Devices (ADI), Atmel (ATML), Intel (INTC), Microsemi (MSCC), Texas Instruments (TXN) and Xilinx (XLNX). "
2001
He sees 25% growth in 200l!
"Semiconductor sector growth of 25% is nothing to sneeze at compared to the 17%-18% "
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