Gottfried,
Thanks again for the great charts.
re: http://home.attbi.com/~gottfriedm/SEMIcharts/SEMIsemi.gif
Either chip makers have enough capacity or they have cold feet.
That disconnect between chip sales and equipment bookings is unique, the two have never diverged as much as they are now. MHO, one of two things is happening:
1. The semiconductor manufacturers anticipate a weak period coming in 2003, and are reluctant to invest.
2. The semiconductor manufacturers have become over-cautious, because of the long down period in the market, the current earnings pressure, and the geopolitical situation, and are reluctant to build capacity even in the face of increasing demand.
IF the latter is true, the implications could be bullish for the semiconductor companies and the equipment manufacturers.
1. Most of the companies are running pretty lean right now, if demand continues to increase, in a high capital investment business, GM's should be very high on the incremental sales. (In a high fixed cost, low variable cost business like semiconductors, incremental sales dollars go largely to the bottom line).
2. If the disconnect continues, you will start to see shortages in some chip categories (especially with record low inventories in the channel). ASP's will rise, further enhancing gross margins. (I've been reading capacity utilization is at about 70%, with general inefficiency in mind, my WAG is that shortages would begin somewhere around 85%[?]).
3. There would be a subsequent spike in chip equipment orders. But there would be a significant catch up period before that equipment can be put to use to alleviate the tight supply.
Of course everything depends on end demand, and the signals are mixed in that regard. The next three weeks of earnings conference calls will be very interesting, starting with Intel on 1/14. They should make the end demand picture much clearer.
John |
