Jay, there are several conflicting ideas all bundled into one idea <I actually am starting to think electronic hardware may never be a good 'growth' business again, given the ease of know-how transfer, and hog wild capacity building still going on.
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Wednesday, August 29, 2001
ANALYSIS: Electronic Device Firms Aggressively Invest In China
TOKYO (Nikkei)--Major electronic device makers in the Osaka area are scrambling to build production bases in China and other foreign countries. The move contrasts with that of leading semiconductor makers, which are closing plants and scaling back capital investment due to the prolonged weakness of the information technology market. Device manufacturers, preparing for an expected recovery in demand, have been particularly aggressive in China where many of their clients are operating. >
The conflicting ideas:
CDMA conflicts with GSM
Mobile phones conflict with Personal Computers
Margins are competed away, but this enhances CDMA sales
China has more market and lower production costs than competing countries
Semiconductor plants are not the same as cellphone semiconductor plants [different meanings competing for the same words]
People needing to go back to work is competing with easy street and irrational exuberance
People back at work competes with recession
In all the doom and gloom about semiconductors, the computing markets and layoffs, the baby is being chucked out with the bathwater.
Yes, the PC industry has hit a flat patch. The server market is in the doldrums. Cyberspace stocks took a king hit.
BUT there are three verities that will apply while there is 20th century human DNA on this planet.
Mobility
Communication
Gigabyte brains
Humans are mobile. We are like chimps and we are mobile. It's in our DNA.
Humans chatter like chimps. We rant and rave and form social context like madmen. That's communication and it's in our DNA.
Gigabyte brains need food. We are more curious than cats and we have a LOT more room in there to stuff stuff. We are insatiable. We have ears and eyes which need data. It's in our DNA.
CDMA and wireless cyberspace will be the delivery agent of those three primary human characteristics. They are not going to go away any time soon and the demand for electronic and photonic gizzards which fulfill those needs will be increasingly in demand. That's CDMA. GSM can't do it.
I learned some more jargon just now: "the decreasing marginal utility of wealth". Message 16270007
My corollary is the increasing marginal desperation of poverty. Which means as recession increases, there is an increasing drive to produce goods and services for other people [or kill them to take possession of their property and food]. That means mobility, communication and information. That means CDMA. Those functions are essential to earn money.
When people have enough, they get fat, dumb and lazy. They stop producing, they become indolent and immobile, they communicate less and they drink more and think less. A recession wakes them up and gets them back to work with their shoulder to the wheel, their nose to the grindstone, their ear to the ground and their back to the wall. It sounds like yoga, but that's what need and work do to people. They use mobile phones flat out!
It happened in Korea and it'll happen around the world. Korea in 1998 fell off the economic map. They cancelled overseas holidays to New Zealand [90% reduction almost overnight] stayed home, bought CDMA phones flat out and got back to work.
Cyberspace isn't going away. CDMA is the gold, as in financial security, as in "Head for the hills". That's because people need to talk, get data and move. They need to do a lot of it and pretty quickly. The quicker the better.
Our job is to pick the hills where we will suffer the least damage from the exogenous events which, as you say, can be very large. I prefer to profit from problems and good times rather than simply hide. I think QUALCOMM is a good hideout for good times and bad. There are always some companies which do okay, even in bad times. Food, booze and baccy are traditional. Add communication [it wasn't possible in previous times of mayhem].
China is not suffering from the decreasing marginal utility of wealth. They are just getting warmed up. [Jay, I am guessing from media reports because I have not been past Hong Kong and remain envious of your up close and personal view].
Mqurice |
