Dave: re: the technology boom of the past years is shifting into low gear:
Yes, but for how long? Do you think we are at the end of a secular trend, and the pace of technological change (and investment in new fabs) is going to slow for the next 10 years or so?
I'm basing my investment strategy on the belief that the exact opposite will happen. If I'm wrong, I'd sure like to know. If you think there is going to be any other industry that grows faster than the semi industry, over the next 10 years, please tell me, and explain in detail.
Do you see any evidence that the recent tech/semi/semi-equip downturn is due to anything other than a liquidity crisis at the bottom of the commodity chip cycle? Those downturns have happened repeatedly in the past;they last months, not years; they are always great buying times.
This is what I see:
1. Remember that 15-year roadmap from the industry, that BB posted (12513), and I commented on (12536)? They projected an acceleration to every-two-year cycles, lasting through 2006.
2. 0.18 micron and 300mm (sorry about my typo last post, I meant 300 not 200) and copper and probably some other things we don't yet know about will force the stronger (those with cash instead of debt on their balance sheets) to place huge orders with AMAT, beginning (at the very latest) at the end of 1998, and extending for 30 months? A big upturn in orders will cause AMAT's price to spike upward. When is the latest that you think those orders will happen?
3. The weaker players will fade away. This is not a problem for AMAT. Lots of semi companies have gone bust in the last 10 years, as the overall industry has grown tremendously.
4. My computer has a lot more gismos on it today than 4 years ago (modem, sound, CD, piano for the kids); more will be added over the next 4 years (DVD, camera, etc.); all these require more and faster chips.
5. 16 mb memeory chips have had the shortest product life of any generation. This confirms that the pace of change is accelerating.
6. The last downturn based for only two months (July-Sept. 1996), before turning sharply upward. Looking back, I can't find any time AMAT went down, and then stayed down for as long as 12 months.
Of course, if you think we are only partway into the downturn, and have several more months of decline in front of us, then the bottom might not happen till June 1998, and the upturn not till the end of 1998. Any predictions for what month the bottom will be?
BTW, I'm not predicting new highs in 1998. My prediction was only that the bottom ( and best buying opportunity) would be about 7-98, give or take a few months. That's not so different from your thoughts, is it? |
