Hi Sam,
I think that disposable income is one variable that has a direct affect on the semi industry. From Ipods, PDAs and PCs to TVs and DVDs to Cell phones, modems, internet telephony and networking, all of these are influenced by the overall economy. The stronger the global economy, the greater demand for the high end, new products. As the economy weakens, so too will the demand for the latest and greatest chipsets decline. This is true all over the world but more so in the US, Asia and Europe, where the adoption of the newest technology has the greatest demand. Demand won't disappear, it will just be reduced. Any reduction in demand will have an affect on semi makers and equipment companies.
Similarly, from a confidence standpoint, the lower consumer and business confidence falls, the lower the demand for all levels of technology. We saw this in the last qtr of 2002 and the 1st quarter of 2003 where the clouds of war put a damper on many different sectors of the global economy (travel, durable goods, PCs+electronics, etc). Business capital investment was at a virtual stand still, which greatly affected the PC makers and networkers. Once everyone realized that the world wasn't coming to an end, we saw a rebound and a solid recovery.
Excessive oil prices act like a direct tax on almost everyone and every business. High oil prices definitely hurt the semi industry!
jmo
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