<<Chalks, while I will not dispute that you might be right and the semi-equip segment bottomed on Dec 12, I would like to point, that historically, the segment does not bottom unitl its BTB has gone under 1, we are still above 1 as we speak, I believe. >>
Two points. First, the easy one - the overall btb is currently at about .99 (it actually cam in higher than I would have thought.)
Second -- you guys talking about the historic patterns of the semi equipment market need to take into consideration that the current decline springs largely from Asian currency problems in particular, and overinvestment in general. I think we're going to see a general bear market for the next year or two for the simple reason that there is too much capitalization for the world economy to sustain, i.e. a borrower's market. This is very apparent in Asia.
That said, semi equipment investment is in the odd position of being overcapitalized (i.e. the Koreans shutting down DRAM lines) but needing major new capital for new technology. This could be the biggest winning sector in the market, unless something really powerful happens in, say, the oil or finance sectors.
Anyway, we are not in a strictly historical cycle. The Asian economies are driving the semi equipment valuations right now, and could continue to do so. For instance, if China devalues the yuan (which they currently swear they won't) it would play havoc with the east Asian recovery, since the various affected economies are depending on exports to stay afloat -- it's the one benefit of currency weakness -- the standard of living may plummet, but you're selling lots of product and bringing in cash. China is losing massive export market share, both because Asia's not importing from China, and because they are undercutting China's prices. China has about $140 billion in stable (Western) curency reserves but it's starting to erode. You'd better believe they don't like it, either.
Anyway, more havoc in Asia would drive the semi equipment market down even further. Don't say it can't happen, that's just what people were saying in November. On the other hand, if the recovery continues on course, the semi equipment sector has probably bottomed already. If China starts a currency devaluation slugfest, it could even hit the Taiwanese. I don't think it's likely to happen, but . . . |
