excuse me if this was posted:
Chip Stocks To Outperform Market, Analyst
Says
(01/29/98; 8:20 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 in San
Francisco, 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 percent, while chip demand is
expected to increase by 10 percent, suggesting a good
year for semiconductor stocks, the analyst said.
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. |
