07:43 Semiconductor-equipment manufacturers mentioned negatively in Barron's Online
Barron's Online highlights semiconductors-equipment manufacturers, which have been stellar performers over the past year. For example KLA-Tencor has doubled since chip equipment stocks hit bottom in Oct 2002. "People have been so interested in the group because it's cyclical," says Mark Fitzgerald, analyst at Banc of America Securities, who said late last month that equipment stocks could fall by about 30%. (The Philadelphia Semi Index has been down as much as 6% since then.) Fitzgerald expects this correction to occur when growth in equipment makers' bookings begins to slow, disappointing investors. "This is a very cyclical industry, and we'd rather be six months early than one day late," says Allen Steinkopf, analyst at Federated Investors, who says the funds sold all their positions in Applied Materials, KLA-Tencor and ASML Holding in Jan. According to article, with strong demand for cell phones and laptops, chipmakers need to boost capacity of their advanced manufacturing facilities, or fabs, which already are running at full capacity. Also, many chipmakers invested little in their fabs over the past few years and are now just catching up. Because of the rally the sector has had, and with growth eventually weakening, the stocks' valuations appear rich. |
