Don, Stock Consultant's technical read on the SOX shows an 80% chance for a bearish downside move in the immediate future. This is the highest probability for downside I have seen at the site.
They show the first area of support of note at 378:
stockconsultant.com
Interestingly AMAT has only a 55% probability of a further drop according to their technical analysis.
Now I know those who are most bullish would say that stock prices today for the group while higher than they were in October 2002 are much lower than 2000. Despite the fall in earnings expectations shown in your last table perhaps with a strong economic recovery there may be plenty of upside ahead.
Here is an interesting article quoting an analyst that calls into question whether or not foundry capacity shortages are being faked?
Analyst claims foundry capacity shortages are 'fake'
By Mark LaPedus
Semiconductor Business News
(06/06/03 03:30 p.m. EST)
SAN JOSE -- Is the silicon foundry industry creating what appears to be “fake” or artificial shortages of leading-edge fab capacity?
Word on the street is that the market--if not the foundries themselves--may be pumping up the business to make a potential killing on inflated wafer prices in the near future.
In a report issued by SG Cowen Securities Corp. this week, for example, the investment banking firm warned that Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC) will not be able to ramp up its leading-edge fab capacity fast enough to meet demand in the second half of the year. By leading-edge fab capacities, the report implied 0.15- to 0.13-micron process technologies.
At the same time, major foundries--including Chartered, IBM, TSMC, and UMC--have separately reported sharp increases in their respective fab capacities. And most have dropped hints that their leading-edge capacities are or will become tight.
So buy your wafers now and fast.
But hang on! Some charge that the perceived shortages of leading-edge capacities are simply “fake.” “The foundries are saying that they are getting tight at the leading-edge processes, as well as trailing-edge technologies like 0.35-micron and better,” said Len Jelinek, an analyst at iSuppli Corp. in El Segundo, Calif.
“I think these are contrived shortages,” Jelinek declared. “It's fake.”
While silicon foundries are warning about potential shortages, they are not exactly expanding their fabs with new and advanced tools; instead, they scrambling to utilize their existing fab capacities, he said. Many providers are sitting on one (or more) under-utilized fab or “empty shell” and are reluctant to move in the tool set, he said.
At its recent technology conference, for example, TSMC admitted that it has plenty of 300-mm capacity on the table. At present, the foundry giant has three 300-mm fab: Fab 12A, 12B, and 14.
TSMC plans to expand the production of its Fab 12A plant from 6,000 wafers a month, to 14,000 by year's end. Capable of making 25,000 wafers a month, Fab12A is a 0.15- to 0.13-micron plant. It has also completed the shell and cleanroom for Fab12B, but the company has yet to install the equipment. The fab is capable of making 25,000 wafers a month, plus 5,000 more for R&D.
It has also completed the shell for the company's Fab14 plant. Capable of making 35,000 wafers a month, the company expects that Fab14 will move into production in 2003 (see April 23 story ).
“I think you can arguably ask the foundries: 'Why aren't you buying any new tools to build up your 12-inch fab? They would say: 'It's economics,' ” he said.
Indeed, the demand picture looks cloudy for the second half of 2003. Some believe the sudden surge for foundry services is more of an inventory replenishment issue verses real end-user demand in the marketplace.
So, as usual, the foundries are caught in a vice. On one hand, the foundries face pressure from customers to expand their capacities. And on the other hand, they face a major risk if the business does not materialize. “They could fall off the cliff in either direction,” according to the iSuppli analyst. |
