|
Tiburon, your analysis of Cube/China is off base. China has foreign currency reserves of approximately $130 billion, with a continuing high level of trade surplus. It's currency will not come under attack. Its domestic economy should continue to expand given a very low base, a liberated marketplace, financial incentives, etc. The problem the government must face is one of holding back the domestic economy so that the dislocations are more gentle and inflation does not become an issue. There is, however, one potential concern for Cube and that is the re-exports from China to the rest of Southeast Asia. Currently, some of Cube's customers import Cube's VCD chips into China, manufacture a VCD player, and then export that finished product to Indonesia, Thailand, Vietnam, etc. This becomes a statistical problem because the chips are counted as going to China but the eventual consumer purchaser is in another country. Because Chinese data gathering is poor,misleading, incomplete, or just plain years late, Cube does not have any firm idea on the extent of the end market in other countries. So if the turmoil in Thailand, Malaysia, Indonesia , etc. hurts the local economies and retail demand for VCD's is decreased, there will be some spillover effect for Cube. But as of right now,there is no indication that re-export from China is a big deal, i.e. the internal Chinese market consumes virtually all of the chips sent by Cube to China. Since the internal Chinese market is solid, the risk to Cube is negligible. |
