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Technology Stocks : Semi Equipment Analysis

SOXX 331.90

-0.4%

4:00 PM EST

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To: sixty2nds who wrote (27424)	12/14/2005 9:40:53 PM
From: robert b furman	Read Replies (1) of 95718

HI Sixty, I wouldn't call it the first. Intel having top line revenue "capped" by chipset shortages/constraints is another way of saying demand extends into the next quarter. TXN seeing strong demand in all areas is another way of saying the same thing. Accross the diversity of tech and semi's - we're seeing demand equal/exceed supply. As revenue appears capped and margins grow - well beyond what cost savings are contributing (from a time perspective-as in downsizing was done by the good ones 3 years ago).We are beginning to see what should have been intuitive,from G's booking/backlog and chip sales vs bookings charts have shown us for several years. The confirmation from SIA that chip dollars sales have surpassed 2000 record levels (while ASP has continued a serious dceline) speaks to the undeniable corollary that chip counts have exploded. Chip counts undeniably equal the need for Capex.It is not price that needs more machines - it is chip count. That being said it is margins that "buy" machines. We are in a sweet spot where tech is being shown "no respect" - because in the last 5 years excess capacity has eroded margins. We are just now enjoying a return to sanity of reinvestment.As chip counts drive margins up - greed will follow in excess capacity-chasing margins. It just will take a controlled holding back, followed by a shortage - which generates exceptional margins - on big volume, followed by excess greed and the associated over investment that also follows. I think/hope we are 12 - 18 months off of the volatility that accompanies the severe profits.GG Bob

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