Keep your heads up, folks! The better days are ahead! Here is the latest Lehman's comments
Headline: Semiconductors: Chip Price Survey
Author: M. A. Gumport, CFA 1(212)526-5368/C. Gangi -3754/T. Berg -5276
Rating:
Company: AMD,ALSC,AVT,IDTI,INTC,LSCC,MU,NSM,STM,TXN,VTSS,XLNX
Country: IND CUS
Industry: SEMICO
Today's Date : 12/23/97
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* 16 MBIT DRAMS DROP SHARPLY.
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16 MBIT DRAMS DROP 10% AGAIN. The crisis in Asia-Pacific is still leaving commodity DRAM makers most exposed. Our spot market survey finds 16 Mbit DRAMs 10-15% below a week ago. Additionally, our sources are now indicating 16 Mbits priced as low as $1.40-1.75. 4 Mbit graphics DRAMs (256K x 16s) are the one bright spot and now actually are priced above 16 Mbit chips. Micron (MU-$26 1/4-1) is most exposed to the negative near term trends of DRAMs. Alliance (ALSC-$4 3/4-1), too, faces near term losses, but ALSC is better able to benefit from the uptick in graphics DRAMs. Also, we note ALSC's joint venture partnership value of at least $10 per share will be realized in the
coming year. Integrated Device Tech. (IDTI-$9 25/32-1) promises a very
important series of new product diversification announcements in early 1998 which should dramatically reposition the company, including an entry into the 60% gross margin CPLD market.
PROCESSORS: PRICES WAR??? Last week we noted that Advanced Micro Devices'
(AMD-$18 9/16-1) K6-233s were available in volume and, consequently, K6-233 prices fell and Pentium 2-233s followed suit. THIS WEEK WE NOTE P2-233s HAVE FALLEN ANOTHER 20% TO WELL BELOW LIST. WE REMAIN CAUTIOUS ON INTEL (INTC-$71 7/16-2).
OVERVIEW - STILL BAD NEWS NEAR TERM: 1) DECELERATION, 2) ASIA/PACIFIC.
EXPECT TURNAROUND IN EARLY 1998 WITH ACCELERATING GROWTH THROUGH THE YEAR. We continue to see 2 short term themes: 1) Deceleration, 2) Asia/Pacific. Deceleration is apparent in National Semiconductor's (NSM-$26 7/8-1) slowdown from 40% to 8% year-over-year order growth Aug. - Nov. (or the peaking of worldwide IC unit growth at 35% last July; latest data shows 24% growth in October). Asia/Pacific's impact is apparent directly in the bankruptcy of Lattice's (LSCC-$54 1/4-1) key disti. in Korea and indirectly in the flood of low priced DRAMs as sales to Asia/Pacific are redirected to the U.S. Our EPS projections remain at the low end of the street and still appear somewhat optimistic. Companies with lowest Asia/Pacific exposure are Vitesse (VTSS-$38 1/4-1), Xilinx (XLNX-$35 3/4-1), and Avnet (AVT-$66 3/4-1), among our favorites. We believe the strongest current fundamental story in our universe is VTSS; longer term, despite current soft results at XLNX and downward revisions at LSCC, we believe these 2 companies have a particularly bright outlook over the next year. Among larger stocks, we believe ongoing long term improvement argues in favor of positions in Texas Instruments (TXN-$46 1/8-1) and SGS Thomson (STM-$59-1). WHILE CHIP STOCK PRICES LIKELY WILL STILL BE
DECLINING SHORT TERM, NOW THROUGH EARLY 1998 APPEARS AN OPPORTUNITY TO
ESTABLISH MAJOR POSITIONS AT VERY ATTRACTIVE PRICES.
Chip Prices (Cont'd) p.2
AICE PRICE SURVEY 12/22 -------% CHG VS.-------
12/22 1WK 2WK 1MO
64MBITS Sync 4Mx16 $22.60 0.0% 0.9% -13.1%
Sync 8Mx8 $22.49 4.2% -2.5% -22.9%
Sync 16Mx4 $23.97 -11.3% -1.1% 0.0%
4MX16EDO $24.45 0.0% 0.0% 0.0%
8MX8 $19.07 -2.2% -10.3% -15.0%
16MX4EDO $15.59 -21.5% -23.6% -30.5%
16MX4 $20.51 0.5% -3.1% -8.6%
16MBITS Sync 1Mx16 $3.47 4.4% 4.4% -18.2%
Sync 2Mx8 $2.35 -22.9% -30.3% -41.5%
Sync 4Mx4 $4.36 -3.9% -5.1% -2.7%
1Mx16 EDO $2.71 -3.6% -6.6% -21.5%
1Mx16 $2.65 -5.7% -9.0% -30.3%
2Mx8 $2.71 -15.1% -15.1% -32.9%
4Mx4 EDO $2.33 -15.0% -23.5% -35.4%
4Mx4 $2.59 -12.1% -23.9% -33.2%
4MBITS 256Kx16 $2.08 0.0% -7.3% -10.2%
1Mx4 EDO $0.77 -19.5% -19.5% -25.0%
1MX4 $1.02 0.0% -28.4% -35.4%
JAPAN 11/26 -------% CHG VS. ------
16 MBIT/4 MBIT 1WK 2WK 1MO PRICE STATUS
1Mx16 EDO $2.80 -3.4% -3.4% -33.8% Down
1Mx16 $3.10 -10.4% -10.4% -26.7% Down
4Mx4 EDO $3.10 -10.4% -10.4% -24.4% Down
4Mx4 $3.10 -10.4% -10.4% -24.4% Down
1MX4 $0.95 -5.0% -5.0% -13.6% Down
SPOT LIST --------% CHG VS.--------
PENTIUM SURVEY (AICE)12/22 10/26 1WK 2WKS 1MO.
P2-300 $745 $738 1.2% 1.2% -1.6%
P2-266 $498 $530 -2.0% -2.0% -5.4%
P2-233 $306 $401 -20.0% -20.0% -24.3%
P6/Pro-200 (256k) $485 $487 -3.0% -3.0% -3.0%
P55C-233 (MMX) $289 $300 0.0% 0.0% -0.5%
P55C-200 (MMX) $211 $213 -1.0% -1.0% -1.7%
P55C-166 (MMX) $110 $145 -11.1% -11.1% -11.1%
P54C-200 $143 $125 -13.4% -13.1% -29.3%
P54C-166 $ 96 $106 -15.1% -15.1% -21.5%
K6 (ESC* -small lots)
K6-233 $221 $225e** -2.6% -12.7% -36.0%
K6-200 $173 $160e** -1.0% -4.4% +1.5%
**e- assumes a 25% discount to Intel Pentium/P55C processors.
Disclosure Legend: A-Lehman Brothers Inc. managed or co-managed within the past three years a public offering of securities for this company. B-An employee of Lehman Brothers Inc. is a director of this company. C-Lehman Brothers Inc. makes a market in the securities of this company. G-The Lehman Brothers analyst who covers this company also has position in its securities.] |
