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Tech Analysts Bullish On Semi Industry In '98
(01/28/98; 6:41 p.m. EST)
Semiconductor Business News
U.S. semiconductor stock prices should
outperform the S&P 500 index in 1998
because of strong demand from personal
computer manufacturers, increased sales to
communications applications and a firming of
memory chip prices, according to Jonathan
Joseph, a senior research analyst at
NationsBanc Montgomery Securities.
During an annual investment conference here
this week, analysts from the securities firm
presented forecasts on a number of
semiconductor sectors. Joseph said he based
his stock price prediction on the correlation
between expected strong demand for chips and
an expected reduction in semiconductor capital
spending in 1998.
Historically, he noted, semiconductor stock
prices rise when capital spending falls but
demand for chips rise. In 1998, total
semiconductor capital spending is expected to
drop 5%, while chip demand is expected to
increase by 10%, suggesting a good year for
semiconductor stocks, the analyst suggested.
Joseph predicted "sustained, double-digit
growth" of demand for chips used in personal
computers, including microprocessors, digital
signal processors (DSPs), microcontrollers and
microperipherals. Also, he said he expects
increasing demand for semiconductors used in
digital wireless telephones and cellular
networks, as communications networking
software is increasingly embedded directly on
semiconductors.
DRAM prices should firm as the year
progresses, according to Joseph.
When it comes to the Asian financial crisis,
Joseph believes semiconductor stocks have
already absorbed the bad news from the
region. He said that concerns about slowing
demand from Asia are real, and that the Asian
"flu" could spread to China and Japan.
But on the positive side for global chip makers,
Joseph said major Korean chip makers, such
as Samsung, are now slashing their capital
spending due to their inability to borrow, and as
a result, they won't be able to add capacity that
might have put further pressure on commodity
chip prices.
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BPP(Bipin's partner) |
